The two year US Treasury note yield of 2.62 dwarfs the ten year German Bond note at 0.34 basis points, with short term money market yields
in the Teutonic Fatherland still negative.
Money market yields
are now increasing, so even cash is becoming competitive with stocks, which has not been true for 10 years.
Investors should keep an eye on the municipal money market yields
, as we expect them to remain attractive compared with taxable money funds with comparable maturities and similar credit ratings.
One can see from the figure that these four do not closely track the three money market yields
. No one uses these money market instruments to finance an investment project, a new house, or a college education.
Since elections we have seen lowering the money market yields
on long term instruments of 3-10 years upto 84bps to currently yield at 9.81-10.89 percent respectively.
Structured products offering capital protection and enhanced yield, to compensate for low money market yields
, are enjoying an under-writing bull market.Yet the end of super-cheap LIBOR-based funding is possibly upon us and rising commodity prices are the last thing central banks need now.
"Right now, with money market yields
at zero and the 10-year Treasury bond under 2%, baby boomers are being forced to look at equities as a way to get income.
Over the course of 2010, money market yields
declined 38% to 0.60%, CDs were down 32% to 1.2%, regular shares finished the year at 0.38% off 28% and share drafts yields declined 23% to finish 2010 at 0.32%, according to the report.
"Institutional profit-taking continued on economic uncertainty, security concerns in the country and rise in money market yields
Something had to be done unless the life companies wanted to be left with only term insurance to sell in circumstances where customers were creating their own "permanent life insurance" by combining the high money market yields
with term policies.
First, low short interest rates and bond yields have encouraged cheap borrowing and enabled private equity specialists to leverage themselves up and to purchase companies on valuations that exploit the difference between money market yields
and earnings yields.
In the City, where short-term money market yields
moved sharply higher, the debate centred largely on the timing of any upward move.