Key facts
- U.S. money market fund assets reached a record $7.5 trillion at the end of Q2 2025.
- Money market funds increased their overall repurchase agreement (repo) allocation to over $3 trillion, representing 41% of assets.
- This increase in repo usage coincided with a decline of $267 billion in U.S. Treasury securities holdings.
- Net U.S. Treasury bill issuance declined by $372 billion during the quarter due to the binding debt ceiling.
- MMFs increased their private (non-RRP) repo outstanding by $243 billion to a record $2.7 trillion.
- Funds are increasingly relying on counterparties like the Fixed Income Clearing Corporation (FICC) for repo transactions.
U.S. money market fund (MMF) assets reached a record $7.5 trillion by the end of the second quarter of 2025, driven by competitive yields and perceived safety. Investors' ability to redeem shares quickly offers an advantage over other cash management options.
MMFs increased their overall allocation to repurchase agreements (repos) to over $3 trillion, or 41% of their assets. This shift is partly attributed to higher rates on private repos compared to the Federal Reserve's overnight reverse repo (ON RRP) offer rate, a reduced supply of high-quality assets like U.S. Treasury bills, and the need to deploy increased cash into liquid investments.
The rise in repo usage coincided with a $267 billion decline in MMF holdings of U.S. Treasury securities. This reduction was influenced by a $372 billion decrease in net U.S. Treasury bill issuance, as the statutory debt ceiling constrained borrowing during the quarter.
MMFs' private (non-RRP) repo outstanding grew by $243 billion to a record $2.7 trillion, making these investments a significant portion of the estimated $12 trillion U.S. repo market. Data also indicate a growing reliance on a few counterparties for repo transactions, with the Fixed Income Clearing Corporation (FICC) being a major one. MMFs access FICC's clearing services through its sponsored repo program, as they are not direct members.