What It Measures
Money Market Funds Total Financial Assets measures the aggregate value of all assets held by U.S. money market mutual funds. This includes:
- Government MMFs: Invest primarily in U.S. government securities and repos
- Prime MMFs: Invest in short-term corporate debt, commercial paper, and bank CDs
- Tax-Exempt MMFs: Invest in municipal securities
The data comes from the Federal Reserve's Z.1 Financial Accounts of the United States (Flow of Funds).
Why It Matters
Cash Indicator: MMF assets represent "dry powder" - cash on the sidelines that could flow into riskier assets.Flight to Safety: During market stress, investors often move money into MMFs, causing assets to spike.Interest Rate Sensitivity: High interest rates make MMFs more attractive vs bank deposits, driving inflows.Liquidity Measure: Shows overall liquidity preference of investors and institutions.
How to Interpret
Rising Assets: Can indicate risk aversion (flight to safety) or simply attractive MMF yields.Falling Assets: May signal money moving into stocks, bonds, or other investments ("risk-on" behavior).Record Highs: Current levels above $7 trillion reflect both high rates and post-2020 liquidity expansion.Yield Spread: Compare MMF yields to bank savings rates to understand flow drivers.
Key Levels to Watch
| Level | Interpretation |
|---|---|
| Above $7 trillion | Record territory, substantial cash reserves |
| $5-7 trillion | Elevated but within recent historical range |
| $3-5 trillion | Pre-pandemic typical range |
| Below $3 trillion | Low MMF holdings, often during low-rate environments |
Historical Context
MMF assets surged to record highs above $7 trillion in 2024-2025, driven by high interest rates making MMFs attractive relative to bank deposits. Previous peaks occurred during financial stress (2008) and the COVID flight to safety (2020).
Limitations
- The data has several limitations:
- Quarterly frequency means it lags weekly ICI data by several weeks
- Does not distinguish between retail and institutional flows (separate series available)
- Level changes may reflect both flows and asset value changes