Average seven-day yields for Taxable MMFs have grown their yield advantage over popular bank savings products since the last time we peered at this issue in early January (See Money Fund Report #2143).
As the calendar flipped to the New Year, iMoneyNet and Informa Research Services national bank data showed Taxable funds on average enjoyed a 10 basis-point lead over three-month certificates of deposit with a half-dozen basis-point edge against bank money-market deposit accounts.
Those yield gaps have widened continuously through the intervening months. The iMoneyNet Money Fund Average™/Taxable (All) reached 0.67 percent as of Aug. 15. That same week our sister Informa Business Intelligence Inc. company reported that the national average for a three-month CD at $25,000 was 0.14 percent; an MMDA at $10,000 was 0.13 percent; and an MMDA at $50,000 was 0.19 percent. That worked out to MMF advantages of 53 basis points, 54 basis points and 48 basis points, respectively.
The Taxable seven-day simple average has blossomed by 0.64 percent since the first Fed rate adjustment on Dec. 16, 2015. However, the IRS-reported three-month CD yield has barely budged, going up only three basis points since then. Increases for larger MMDAs have also been miniscule at two basis points and smaller MMDAs have offered depositors only one basis point more than they received from June 2015 through April 11.
U.S. MMFs enjoyed years of yield leadership over the competing bank products that was toppled during the second half of 2008 marked by the financial collapse of Lehman Brothers and what it triggered elsewhere.
For historical perspective, iMoneyNet recorded these Taxable seven-day average yields at times of recent rate moves by the Federal Open Market Committee: 0.03 percent on Dec. 16, 2015; 0.17 percent on Dec. 14, 2016; 0.29 percent this March 15; and 0.57 percent on June 14.