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Right on, billjam. I think you analysis is reasonable. These are risky times for new bond investments--because of the uncertainty you mention. So parking funds in money markets or in CDs until things settle down is certainly reasonable.

Fools will agree that short term bond funds offer the lowest interest rate risk and longer term ones such as High Yield Corporate the greatest risk. From the data you have, its easy to sit down and estimate how much interest rates have to rise before the higher yield you get in other investments gets wiped out by rising interest rates. Then from the way the Feds have been doing things, you can estimate how long that will take or how likely.

Hence, you can make more money by moving your funds to riskier bonds funds for a while--provided your estimates of the timing and magnitude of interest rate increases prove to be correct. Are you willing to take that risk? If not, then parking the funds in CDs is the better move.
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