One of the most unusual manifestations of the financial crisis has shown up in US municipal money market funds. This ostensibly conservative security has seen current yields soaring to historic levels, ludicrously offering twice the interest payout of taxable money market accounts.

In early October, municipal money funds were averaging seven-day trailing yields of more than 5 per cent. According to Fidelity’s fixed income desk, the tax equivalent yield of its New York Municipal Money Market Fund, that is, the yield a fully taxable fund would have to pay to generate the same return for a New York City-based investor, was 8.38 per cent. Fidelity’s taxable Cash Reserve Fund was yielding 2.62 per cent.