Barron's: It's a Good Time for Savers
Barron's writes, "It's a Good Time for Savers. 3 Places to Park Your Cash Now." They tell us, "There may be some uncertainty over the Federal Reserve's moves on interest rates over the next few months, but regardless of what the Fed does, it is still a good time for savers. The Fed's rapid rate-hikes not only mean they can earn interest on their nest eggs, savers also finally have options for how to do so. Yields on money-market funds are hovering around 5%, which is well above the 0.5% average for savings accounts, according to Bankrate data. With the Fed seemingly intent on raising rates by 25 basis points to a range of 5.25% to 5.5% at its meeting this week, that yield looks pretty healthy." Tom Essaye, founder of Sevens Report Research, told Barron's, "Money markets pay 5% and they're incredibly safe. It's a great place to park cash while deciding what you want to do." The piece continues, "For investors taking a more bullish view on the economy, high yield or corporate debt could be a place to invest. The SPDR Bloomberg High Yield Bond ETF (JNK) currently yields 6.4% while the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) yields 5.6% -- both a tick above current money market rates. There could be even more upside for investors, presuming the economy doesn’t turn south." It adds, "'We're at a point here where, after 500 bps of tightening, we're approaching the end. We probably have one or two more hikes,' Jeff Weaver, senior portfolio manager at Allspring Global Investments, said recently at a Crane Data conference. With the Fed likely to leave rates higher for longer because of a tight labor market and high inflation, going out on the curve does make sense. 'But certainly, we’re nearing the end of the interest-rate hike cycle and it does warrant some extension,' he said." Of course, investors can be forgiven for avoiding the coin flip on the path of the economy and instead sticking with money markets. Sometimes simpler is better -- and just as profitable."
