Saturday Wall Street Journal article, ”Shoppers for Mortgages Say Ouch!” (http://online.wsj.com/article/SB118134454675329632.html?mod=home_whats_news_us) discusses rising long-term rates and features a chart of money market mutual fund and CD rates. The piece says, “While these short-term funds won’t get a rate boost from higher long-term rates, investors won’t lose money if bond and stock prices keep falling.”
We’d like to hear whether visitors think rising long-term rates will eventually pull cash away from money market funds, which have been red-hot as of late, or whether losses in the bond market will make money funds even more attractive.
I’m of course biased towards money funds, but I would expect money fund flows to get even stronger. Money fund yields remain extremely attractive, and bond yields will have to rise considerably higher to stauch the flood into cash. Any thoughts?
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