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Cash Is King Again, But Is That also A Sign That Another Recession Is Looming?

FYI: Interest rates on two-year certificates of deposit have just cracked 3%.

Yes — cash is back.

Once again people who don’t want to take on the risks of the stock market or the bond market or the gold market or any other market — and just want a reasonable rate of return on their savings without having to worry — are starting to feel some love.

Interest rates on two-year certificates of deposit or CDs — not quite “cash,” but pretty close — have just cracked 3% for the first time since living memory. And rates on parallel two-year Treasury bonds are not far behind. Just a couple of years ago they were offering barely half a percent — and this minuscule rate of interest, of course, was fully taxable too.

These rates are already well ahead of the 2.2% overnight Federal Funds rate set by the Federal Reserve, as financial markets have already anticipated further rate hikes by the Fed, expected later this year and in 2019.
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