This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
Cash has been king this year.
That is, many investors have seen attractive interest rates for the first time in their adult lives. That has drawn them into short-term instruments commonly referred to as “cash” like CDs and Treasury bills.
Now may be the time to pivot. Even though the Fed isn’t expected to start cutting interest rates until sometime next year, the best yields for cash may be in the past. Now, while the Fed is on pause, is the best window for equity and bond returns relative to cash, says Gargi Chaudhuri, head of investment strategy at BlackRock iShares Americas.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
“Get out of cash now,” Chaudhuri told Yahoo Finance Live. “Take advantage of some of these incredible things in the fixed income markets, especially in the belly of the curve. Take advantage of the companies that are still available to you at reasonable prices.”
Of course, the latter assumes upside to stocks in 2024, but on that front, there’s been plenty of optimism to go around. (And individual stock picks can certainly go up even if the overall market suffers).
That jump from cash to equities and bonds could provide a further tailwind.
“I wouldn’t be surprised if we see some flows out of cash into stocks and bonds, mainly because we’ve seen such a pileup in cash and some investors taking on cash could be more rate sensitive,” said Callie Cox, US investment analyst at eToro. “Once we see the flow of rate cuts, cash goes to spend or people invest. Either way, that’s got to be good for the economy and risk assets.”
Lately the main question for markets has become how long the Fed’s “pause” period will last, and whether cuts will begin early or later next year. That could affect a number of investment decisions, including the ideal window of time for investors to turn from cash to other assets.
Meanwhile, we’ll see how quickly fat-yielding savings accounts will come back down to the lean levels of the past several decades.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance
