Money Market yields dropped a lot!

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mtmingus
Posts: 239
Joined: Sun Jan 07, 2018 4:15 pm

Money Market yields dropped a lot!

Post by mtmingus » Sun Nov 10, 2019 12:43 pm

7-day yield Vanguard Prime Money Market Fund VMMXX dropped from 2+% to 1.8%,
FIDELITY GOVT MMKT PREMIUM CLASS FZCXX dropped to 1.4%!

fwellimort
Posts: 115
Joined: Tue Feb 12, 2019 9:41 am

Re: Money Market yields dropped a lot!

Post by fwellimort » Sun Nov 10, 2019 12:47 pm

The Federal Funds Rate has been lowering quite substantially recently.

In the beginning of the year, we were at 2.4%. Currently, we are at 1.55%.
https://www.macrotrends.net/2015/fed-fu ... ical-chart

Because Federal Funds Rate has been getting lowered, money market / HYSA rates have also lowered as a result of this.
Nothing abnormal.

If we get more rate cuts from here, then yields would again fail. Otherwise, yields will rise or stay the same.

Trader Joe
Posts: 1257
Joined: Fri Apr 25, 2014 6:38 pm

Re: Money Market yields dropped a lot!

Post by Trader Joe » Sun Nov 10, 2019 6:59 pm

mtmingus wrote:
Sun Nov 10, 2019 12:43 pm
7-day yield Vanguard Prime Money Market Fund VMMXX dropped from 2+% to 1.8%,
FIDELITY GOVT MMKT PREMIUM CLASS FZCXX dropped to 1.4%!
"7-day yield Vanguard Prime Money Market Fund VMMXX dropped from 2+% to 1.8%"

Do you really consider this "a lot"?

aerosurfer
Posts: 136
Joined: Fri Feb 02, 2018 6:10 am

Re: Money Market yields dropped a lot!

Post by aerosurfer » Sun Nov 10, 2019 7:09 pm

Well it is a 10% drop... all relative to what that means to the individual and how much money they have tied up in it

Topic Author
mtmingus
Posts: 239
Joined: Sun Jan 07, 2018 4:15 pm

Re: Money Market yields dropped a lot!

Post by mtmingus » Mon Nov 11, 2019 7:58 am

aerosurfer wrote:
Sun Nov 10, 2019 7:09 pm
Well it is a 10% drop... all relative to what that means to the individual and how much money they have tied up in it
Exactly!

TBillT
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Joined: Sat Sep 17, 2011 1:43 pm

Re: Money Market yields dropped a lot!

Post by TBillT » Mon Nov 11, 2019 8:17 am

We still have the Vanguard US Treasury MMF (which we still own but I realize may not be available now) is about the same yield as Prime, so I am using the USTreas MMF for the state tax deduction.

Need to monitor the tax free MMF to see if that is getting better relative to the others.

MikeG62
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Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Money Market yields dropped a lot!

Post by MikeG62 » Mon Nov 11, 2019 8:29 am

mtmingus wrote:
Sun Nov 10, 2019 12:43 pm
7-day yield Vanguard Prime Money Market Fund VMMXX dropped from 2+% to 1.8%,
FIDELITY GOVT MMKT PREMIUM CLASS FZCXX dropped to 1.4%!
This has been a slow bleed for 6 months now. The time to act was several months ago - shift to no-penalty CD's was a solid choice (which at the time were yielding 2.30%-2.35%). PSECU CD promotional offer was another option (unfortunately that expired this weekend). Of course, funds would have been tied up.

If in your shoes I'd consider shifting to a 7-month NP CD at Marcus (current yield is 2.0%). At the same time, I'd also keep my eyes open for other promotional offers that may arise going forward.
Real Knowledge Comes Only From Experience

retiringwhen
Posts: 1436
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Location: New Jersey, USA

Re: Money Market yields dropped a lot!

Post by retiringwhen » Mon Nov 11, 2019 8:53 am

mtmingus wrote:
Sun Nov 10, 2019 12:43 pm
7-day yield Vanguard Prime Money Market Fund VMMXX dropped from 2+% to 1.8%,
FIDELITY GOVT MMKT PREMIUM CLASS FZCXX dropped to 1.4%!
that 0.2% extra expense ratio (or a J G Bankerton calls it "the rake" or as Jack Bogle called it the "croupier's take") looms larger as yields go down.

That is why I stay with Vanguard for any and all cash (and bonds for that matter).

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