Treasury Yields Fall, Market Tanks and Only Cash is Safe

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Markets are tanking. This is a terrible time to be invested.

Stock markets are just beginning a long decent.

Commodities have done well, but that has been largely driven by hedge funds.  The funds will now sell to preserve gains (cover losses from equity markets).  There will be a cascading effect across all commodity classes which will be exascerbated by a global market decline.

Inflation is spiraling out of control.  The Fed is not addressing it, and now looks increasingly unlikely to do anything.  Treasury yields on 2 year, 5 year and 10 year Treasuries have fallen by 30 bps over the last week.  Your cash will earn less now in spite of inflation.

Cash is still the best place to be for the moment.  I think investors though should be jumping on some of the short term CD offerings before they go away (one year or less is my preference).  These rates are being held at these levels as banks compete for deposits, but they are unlikely to stay there now as we head into a deep, deep recession.

These are scary times folks.  It is OK to run for cover.

Check current savings rates here.

 

 

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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Comments

  • Sam Cass

    July 10, 2008

    I don't think bank interest rates are going to move lower. The probability is still that the Fed is going to raise rates, not lower it and it's the Fed Funds Rate that is used by banks to set deposit rates. Even as treasuries have fallen over the last couple of weeks, bank rates have gone up.

    As long as inflation is a concern and the Fed can't drop rates, bank rates will stay up.

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