Fed President John Williams said he expects “bumps along the way” in the effort to rein in inflation.
Investors are betting that short-term interest rates will remain elevated for longer than many anticipated.
Policymakers are expected to leave interest rates steady when they meet this month and to cut later in the year.
Strains in funding markets traditionally increase at the end of the year.
The reversal may mark "a turning point," said BlackRock's Jeffrey Rosenberg.
Interest rates north of 5% and fixed-income volatility drove investors to havens.
Nowhere is that appetite for liquid, high-yielding instruments more apparent than in the market for T-bills.
Short-term rates above 5% continue to lure investors to money-market assets.
Total assets fell to $5.45 trillion from an all-time high $5.47 trillion in the week to July 5.
The regulator's rules are meant to discourage runs and shield remaining shareholders from costs tied to redemptions.
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