No. of Recommendations: 3
i would think the money removed from the stock market will be put in fixed income,,bonds cds and the like, so the demand would increase for the fixed income products and that would push the rates higher ,,, so if this decline is only a correction i would assume rates would push higher in the coming months???? but i guess we wont see 7% returns in the next couple of months but maybe a consistent 6%

I'm afraid I don't understand your reasoning.

If people flee the stock market and buy bonds that drives up the tradable value of bonds but drives down the yield (which is what we've seen this week).

If it turns out this down stock market is just a brief "correction" (i.e., hedge funds dumping stocks and buying back in a little while later), that would probably mean yields on bonds would go up again. But, unless the Chinese government or other big holders of Treasuries suddenly decide to dump their holdings, we would only see a modest reversal of yields. I think inflation from higher gas prices will be a factor in the coming months, and in a few years the end of the SS surplus could lead to sharply higher Treasury yields if the politicians don't do something in the budget balancing department. But I seriously doubt we'll see Treasury yields much higher than their recent peak last summer (about 2.6% for 10 year TIPS and 5.5% for some Treasury maturities).

CDs obey their own rules, though generally competitive with Treasuries. With the continued low savings rate and high borrowing rate, along with greater competition thanks to the internet, I expect we will be able to find CDs with better after-tax returns than Treasuries with similar maturities fairly consistently, except maybe on the very short end. However, I doubt we will see the kind of extreme out-of-whack yields being offered by Pen Fed on a regular basis, but I was dead wrong about March (I voted 5.25% on 5-years, but would not have been surprised to have seen lower).
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