Sunday, January 18, 2009

Any Interest in Interest?



Is there any safe way to receive a reasonable interest rate on the bond portion of your portfolio?

High quality corporate bonds (LQD) and municipal bonds (MUB) have recovered from the market crash. (See the plot above.) Corporate junk bonds (COY) have made a nice move up off of the bottom, but are still down substantially. Long term treasuries (TLT) have been the big winner during the market crash, but will plummet at some point. Inflation protected treasuries (TIP) are up a bit from their crash lows, but there is no inflation panic yet.

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