U.S. money fund assets post biggest drop in nine months: iMoneyNet

NEW YORK (Reuters) - U.S. money market fund assets recorded their steepest drop in nine months as Wall Street had posted hefty gains tied to optimism on trade talks between China and the United States, a report released on Wednesday showed.

Investors withdrew $39.88 billion from money funds in the week ended March 19, marking the largest outflows since last June, the Money Fund Report said.

Total money market fund assets fell to $3.031 trillion, retreating from a nine-year peak the week before.

Taxable money market fund assets decreased by $39.83 billion to $2.892 trillion, while tax-free assets decreased by $49.50 million to $139.49 billion, according to the report, published by iMoneyNet.

Last week, the S&P 500 index increased 2.9 percent, which was its strongest weekly gain since November.

The seven-day yields on taxable money-market funds averaged 2.07 percent, up from 2.06 percent the prior week, while the seven-day yields on tax-free and municipal money funds slipped to 1.19 percent from 1.24 percent.

Money market fund yields will likely face downward pressure in the coming days after the Federal Reserve hinted it would leave borrowing costs alone for the rest of 2019 due to signs of a slowing global economy, together with uncertainty over Brexit and U.S.-China trade negotiations.

“It may be some time before the outlook for jobs and inflation calls clearly for a change in policy,” Fed Chairman Jerome Powell said in a news conference following the end of a two-day Fed policy meeting. “‘Patient’ means that we see no need to rush to judgment.”

Reporting by Richard Leong; Editing by Lisa Shumaker