Prime Institutional Money Fund Flows Back in the Black

Prime institutional money market fund assets rose for the first time since Sept. 9 last Thursday, by $2.96 billion to $652.6 billion, according to Crane Data.

Whereas money market fund assets on the whole have rebounded ever since the Department of the Treasury announced its $50 billion guarantee program, prime money market funds have lost billions of dollars, causing concern among policymakers about the stability of the credit system.

“With even a modest rebound in this sector, though, we should see the pressures on the commercial paper market begin to ease,” said Peter Crane, principal of Crane Data.

In the past three weeks, more than $439 billion has left prime institutional funds, while $277 billion moved into government institutional funds. Overall, institutional money fund assets have fallen by $185 billion in the past three weeks ended Oct. 1.

Crane noted that the latest weekly money fund flows indicate “the overall stabilization of the asset base.” In the week ended Oct. 1, assets in money market funds rose $1.34 billion to $3.399 trillion.