Tax-Exempt Assets Post Slight Drop, Losing $500.2M to Settle at $493.58B

Tax-exempt money market fund assets took a slight dip for the week ending Dec. 1, losing $500.2 million and settling at $493.58 billion after climbing $1.61 billion and reaching $494.08 billion the previous week, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

The loss pales in comparison to two weeks ago when the funds suffered outflows of $4.11 billion and ended the week of Nov. 18 with $492.47 billion.

The average seven-day yield for the 516 tax-exempt municipal funds in the report this week fell five basis points to 0.79% from 0.84%, while the average maturity remained unchanged at 30 days.

Meanwhile in the taxable market, the 1,249 funds in the report amassed inflows of $23.55 billion to settle with a new all-time high of $3.16 trillion for the week ending Dec. 2, surpassing last week's record of $3.14 trillion after the funds accumulated $36.36 billion for the week ending Nov. 25.

Yields on the taxable money funds dropped eight basis points to 1.04% from 1.12%.

Likewise, the combined assets of the 1,765 tax-free and taxable money funds in the report this week broke the previous week's record when they gained $23.05 billion and finished with $3.65 trillion. That was slightly higher than the $3.63 trillion all-time high set for the week ending Nov. 25, when the two classes of funds added combined inflows of $37.97 billion.

Like the yields in the money fund sector, yields in other segments of the short-term market are declining.

For instance, the yield on daily general market variable-rate demand obligations fell to 0.84% as of Wednesday, compared with 1.18% the week before, according to Municipal Market Data. Meanwhile, the yield on weekly general market VRDOs dropped to 1.46% on Wednesday versus 1.65% a week before.

The Securities Industry and Financial Markets Association's weekly swap index, meanwhile, continued its steady decline from its high of 7.96% on Sept. 24, falling to 1.03% as of Nov. 26, down from 1.12% on Nov. 19, 1.14% on Nov. 12, and 1.26% on Nov. 5.

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