It's an interesting time for market watchers, at least for those of us with no dog in the fight. (What a terrible figure of speech.)
Treasury prices swelled last week as investors sought safety from economic and political turmoil across the globe. The trend continued into this week, an Associated Press story reported Tuesday that yields on both the 10-year note and 30-year bond, had reached the lowest level of the year.
Bond prices have an inverse relationship to yields. When prices go up, yields go down. When no one wants them, yields go up.
A similar situation has been played out this year in CDs and money market accounts according to Market Rates Insight, a firm that tracks pricing trends and provides analysis for financial institutions.
There has been a noticeable shift of deposit balances from CDs to money market accounts in the first quarter of this year, says Dan Geller, executive vice president of Market Rates Insight.
Considering current yields on money market accounts, one might wonder why investors would flee from CDs. The average yield on money market accounts is 0.22 percent according to the most recent Interest Rate Roundup, though higher yields are available.
"Basically it’s a sign of uncertainty about the prospects of short-term economic recovery," says Geller.
"CDs are a term account and are a time commitment. We are seeing that less money is being committed and more is going to liquid accounts for the flexibility of pulling the money out right away," he says.
In today's market, fear is stronger than greed.
Are you waiting on the sidelines or do you have your money invested in the market now?