After three years of rapidly unwinding holdings in banks that share the euro currency, U.S. money market funds have dipped back in.
I thought I was clever. Earlier this year I had over half of my 401k assets in cash. I know that investors are terrible at timing the market and I'm way too young not to be fully invested, but I can't get over the fact that stocks look expensive right now.
I'm thinking of stashing cash for emergencies into a Treasury Inflation Protected Securities (TIPS) mutual fund rather than CDs or a money-market account. The return is better and the risk doesn't seem to be much higher. What do you think of this plan? -- Ronnie Colvin, Madison, Alabama
With the economy wobbling, what's the best way to tell whether the stock market is headed for a complete meltdown or poised for a roaring rally? Simple: Watch the spreads. No, not the latest lines from Vegas oddsmakers. Rather, experts point to three key metrics in the credit markets that have historically given investors a good sense of the risk environment ahead.
As the European debt crisis heated up, managers of American money market funds started pulling money out of European banks, with the French banks feeling the biggest impact.
The sovereign debt problems in Europe have roiled financial markets around the world.
Though you no longer have to worry about the havoc a debt-ceiling default could wreak on your finances, another threat lingers for Americans: The fallout from any future downgrade of U.S. government debt.
Investors in the bond market are quickly losing patience with what is seen as an epic failure of leadership in Washington over the nation's finances.
Question: I'm within five years of retirement and currently have about 35% of my investments in bond funds. With rising interest rates a likely scenario, how do I stay diversified without exposing myself to a "bond bubble"? -- John Clay, East Helena, Montana
Question: I'm 26 years old and keep my money, about $300,000, in a savings account because I can't handle the volatility of the stock market. Until the recession hit, I was earning at least 4%. But now I'm getting a pathetic 1%. What's the smartest way for me to get a decent return? -- Daniel, Brooklyn, New York
Question: I'm 37 years old and currently have about $175,000 in my retirement accounts, including $15,000 in my Roth. I also have a taxable brokerage account with about $15,000 in savings as my safety net, to which I contribute about $400 a month. I'm confident I'm on target in my retirement accounts, but hate that my cash is just sitting there in my brokerage account. I'd like a relatively conservative investment that will allow me to keep my cash liquid in case I need it. Any suggestions? -- Leo, Oakland, Calif.
Treasury prices rallied and yields slipped Tuesday as confidence in the global economy dropped and investors flocked to the safety of the bond market.
Treasurys rose Monday as stocks ended lower, the euro sank and fears about the global economic recovery persisted.
Treasurys rallied Tuesday as stocks closed lower, the euro tumbled and investors digested conflicting economic data from the government.
Treasurys gave up gains late Monday as stocks rebounded and the euro recovered from earlier losses.
Treasurys were mostly higher Thursday as stocks ended lower and the euro declined, boosting the appeal of safe haven bonds.
Question: My wife and I have $25,000 in a money market account earning almost nothing in interest. We would like to place $20,000 in some kind of an account that will give us a better return. This is our emergency money, so we'd like to invest it in something fairly safe. We also need to be able access the funds if necessary. I've had suggestions to invest in bonds, CDs and another money market account. Do you have any suggestions or recommendations? --Ted Graham, Grandville, MIchigan
Question: My wife and I have two small kids and we're saving for a house that we'd like to buy within the next two years. We've got a significant pot of cash (more than $100,000) that we almost invested before the market tanked, but thankfully did not. I'm now wondering, however, whether I should invest some or all of it to grow our house fund more quickly or whether I should just keep this money liquid. What do you think? -- Dave, Boston, Mass.
Question: My wife and I keep $20,000 in a passbook savings account as an emergency reserve. What's driving me crazy is that we're getting only 60 cents a month in interest. I like the security of the account and the immediate access, but 60 cents a month on 20 grand???? How can I do better? --Dale F., Waldorf, Maryland
Question: I just heard that the federal government is no longer insuring money market accounts for their $1 per share value. Is that correct? --Terry, Las Vegas, Nevada
As government regulators switch from crisis-mode to rescue mode, many of the biggest and most successful bailout programs are well on their way to extinction. But there are plenty of others that are gaining momentum as the economy heads toward a recovery.
A key bank-to-bank lending rate fell to its lowest point on record Wednesday, signaling continued easing of the once-frozen credit markets.
Treasurys enjoyed a small bounce Monday as a government auction of short-term notes attracted high demand and as investors sought shelter from a selloff in stocks.
The government's economic recovery efforts have brought many new and unfamiliar financial terms into the conversation. Here's a list of some we think are vital to understanding the recession and the government's attempts to fix it:
Former Federal Reserve Chairman Alan Greenspan said the credit crunch should be over by now. But just ask anyone who has tried to get a loan recently, and they'll tell you a different story.
Treasurys drifted lower Tuesday as investors responded to a stronger than expected report on the housing market and a slower decline in regional manufacturing activity.
Treasury prices rebounded Friday ahead of a week full of auctions, government purchase operations, and the Federal Reserve's two day meeting.
Government bond prices rose Wednesday, with gains accelerating after the Federal Reserve released its most recent - and increasingly grim - forecast for the economy as the minutes from its April meeting.
Treasury prices rose Monday as the Dow hit a triple-digit selloff after a two-month rally and the Federal Reserve prepared to buy U.S. debt throughout the week.
Short-term lending rates touched another record low Wednesday in a sign of easier borrowing, while Treasury prices were mixed amid concerns about the banking sector and a major sale of U.S. debt.
The Securities and Exchange Commission has filed fraud charges against the operators of the Reserve Primary Fund for failing to provide important information to investors and trustees about the fund's exposure to Lehman Brothers.
A key interbank lending rate fell to its lowest point on record Tuesday as credit market conditions continue to ease.
Treasurys were mixed Wednesday as investors responded to reports on inflation and industrial production.
Treasurys drifted higher Tuesday as dour economic reports weighed on the market and the Federal Reserve bought another $7.3 billion in government debt.
Government debt prices dropped Thursday as stocks rallied on Wells Fargo's first-quarter profit forecast.
Government debt prices rose after three auctions Tuesday, as investors sought safety while the stock market slipped.
Treasurys turned lower Monday as investors expressed concern over the flood of debt the government was bringing to market.
Treasurys edged lower Friday after the government reported that unemployment rose to a 25-year high.
Bond prices fell Thursday as investors fled to the stock market, which rallied at the start of a meeting of the world's largest economies.
Suddenly, cash is king again. With more and more Americans worried about their job security, the personal savings rate has climbed to 3.6%, up from next to nothing two years ago. Investors, meanwhile, have parked billions of dollars on the sidelines while they wait for better days. But with interest rates on savings near record lows, it pays to be savvy about where you stockpile your rainy-day funds. Here's what you should keep in mind.
Treasurys were mixed Wednesday, with longer term bonds gaining, after the Federal Reserve held its fourth purchase operation.
Treasury prices managed a modest advance Tuesday, trading thinly and reversing directions frequently on the last day of the first quarter of 2009.
Treasury prices rose Monday, fueled by uncertainty about the nation's economic recovery after the Obama administration rejected turnaround plans submitted by U.S. automakers General Motors Corp. and Chrysler LLC.
The credit market hasn't shown many signs of changing recently, but that actually may be a good thing.
The Federal Reserve hoped that low bond yields would help heat up the housing market and consumer lending, but low yields may also have helped to ignite the stock market.
Now that even the biggest banks are battling for survival, traditionally safe investments suddenly look fallible.
Treasurys turned mixed Tuesday, with the 30-year bond advancing, after the Federal Reserve released details of its plan to buy longer-term issues and the government auctioned another $40 billion in U.S. debt.
Government debt prices fell Monday as stock prices soared after the Treasury Department unveiled its plan to partner with private investors to buy up banks' troubled assets.
Treasury prices fell Friday as investors stepped back from a recent runup to mull the Federal Reserve's plan to buy $300 billion of government bonds - a move the central bank has hinted at for months.
Treasury prices eased Thursday as investors responded to the Federal Reserve's plan to buy $300 billion in long-term government debt and braced for next week's auctions.
Treasury prices surged Wednesday, after the Federal Reserve said it would buy up to $300 billion in long-term Treasurys - a move the central bank has hinted at for months.
Treasurys retreated Tuesday, with the yield on the 10-year note rising above 3%, as stocks rallied in New York.
Government bonds fall Monday afternoon after stocks end lower, letting go of early gains and snapping a five-day rally.
Treasurys ended a volatile trading day mixed Friday as stocks managed to pull out gains for a fourth day in a row.
Treasurys advanced Thursday as investors responded to another strong auction of U.S. debt.
Treasury prices held in a tight range Monday as investors weighed $180 billion worth of government debt auctions later in the week with U.S. stocks at 12-year lows.
Treasurys prices fell Friday as investors braced for an onslaught of new supply headed to market next week and stocks held onto small gains in a late-session rally.
Treasury prices fell Wednesday as stocks rallied worldwide and investors remain concerned about record amounts of debt coming to the market.
Treasurys eased Tuesday amid concerns about growing supply and volatile stock prices.
Bond prices rose Monday as stocks buckled in response to a massive quarterly loss by insurance giant AIG and ongoing concerns about the economy.
Treasurys fell Thursday as the government auctioned off a record amount of debt this week and President Barack Obama outlined a budget that called for more spending.
David Swensen, chief investment officer at Yale University since 1985, manages its $17 billion endowment, which is known for consistently outperforming the market. In fact, it averaged returns of 17% annually over the past 10 years.
U.S. Treasury prices eased Wednesday as a major influx of supply vied with continued demand from investors looking for a safe investment amid the dour economic climate.
Treasury prices held close to even Tuesday, as investors awaited another large government debt auction.
Bonds rose Monday as investors sought safety in government-backed debt amid a massive selloff in equities.
Government bond prices rallied Friday, as shell-shocked investors retreated from Wall Street.
Government bond prices eased Thursday as investors focused on a fresh volume of short-term debt headed to market.
Treasury prices dipped Wednesday as the government unveiled a $75 billion housing stimulus program.
China and Japan will stop lending to the United States! The U.S. government won't be able to finance its stimulus and bailout programs!
Government debt prices slid Friday as investors assessed the Obama administration's economic rescue efforts and the volume of debt coming to market to fund the operations.
Government debt prices churned Thursday as investors weighed a week of successful refunding auctions with the progress of the stimulus proposal in Congress.
Prices for long-term Treasury bonds rose Wednesday as investors remained wary about the prospects for an economic recovery despite a breakthrough in the debate over the government's $789 billion stimulus plan.
Treasury prices jumped Tuesday as investors looked past the massive rescue packages being pushed around Washington to the staggering economy commanding them.
Government debt prices drooped Monday at the start of a week of large new debt sales, and as investors wait for further clarity on the economic stimulus plan.
The government bond market refocused on the tremendous volume of supply headed to market next week after a worse-than-expected jobs report sparked stimulus optimism.
Government debt prices rose Thursday ahead of the monthly government employment report and after some dour economic reports were released.
Government debt prices edged lower Wednesday as investors shrugged off the announcement of a record quarterly refunding of longer-term debt.
The Treasury market wasn't able to turn its attention away from the avalanche of supply clogging up the pipelines.
Government bond prices edged higher Monday as jittery investors continued digesting dour economic data and prepared for more bad news, but also weighed a constant flood of supply headed to market.
Treasury prices rose Friday after a report showed the nation's economy shrunk in the fourth quarter and economists debated how to rescue the banking system.
Businesses largely moved out of a Federal Reserve lending program this week, signaling a shift in how companies are choosing to borrow money.
Treasury prices fell Thursday as the government continues to auction record amounts of debt and as investors consider whether or not the Fed will eventually buy longer dated securities.
Government debt prices extended declines Wednesday after the Federal Reserve said it is prepared to buy long term Treasurys but did not offer the specific details that many investors were looking for.
Treasurys rallied Tuesday after a record 2-year note auction attracted more bidders than available notes.
Government debt prices fell Monday as the market weighed a record amount of supply in the pipelines against a fresh wave of layoffs.
Credit markets remain under pressure as the weak economy and ongoing turmoil in the banking sector continue to take a toll on lending confidence.
Government debt prices were mostly lower Thursday as investors balanced concerns over the recession against a record supply of debt headed to market to fund stimulus programs.
Government debt prices continued to decline Wednesday as the market prepared for unprecedented levels of new issues.
Borrowing was slightly less expensive Monday after Britain unveiled a new bank rescue plan aimed at increasing the availability of credit and boosting bank lending.
Government debt prices traded in a tight range Thursday as investors weighed a slew of mixed economic data, turmoil in the banking sector and a growing supply of government debt coming to market.
Government debt prices moved in a narrow range Tuesday after Federal Reserve Chairman Ben Bernanke said that there may have to be more bailouts of faltering financial institutions in the coming months.
Government debt prices rose Friday after the Labor Department released a dismal December unemployment report.
Treasury prices fell Wednesday - after a record $30 billion auction of 3-year notes - amid speculation that the new president will increase debt sales.
Treasury prices churned Tuesday as investors weighed a tremendous amount of new debt coming to market with continued concerns about an economy mired in recession.
Treasurys started 2009 on a down note Friday in the first trading day of the new year.
If the story of 2008 was the government's unprecedented multi-trillion dollar bailouts of the financial sector, then the credit market was the story behind the story.
Treasurys were little changed Tuesday, even after more dour reports on housing and consumer confidence.
Treasurys rose Monday as investors continued to seek out the safety of government-backed bonds in the last few trading days of the year.
After an unusual three-day slide, Treasurys bounced back Wednesday, resuming their nearly uninterrupted upward trend that has persisted since mid-September.
Government bonds continued a three-day slide Tuesday, after the Treasury Department auctioned off another $28 billion in debt.
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