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Here’s where you can find higher yields on your cash now, as Fed rate cuts loom and CD rates are already falling

1. Financial advisers suggest exploring alternatives to CDs as rates decline. 2. Corporate and municipal bonds are becoming preferred options for cash parking. 3. The Federal Reserve is expected to cut interest rates for the first time in 2025. 4. Yield comparisons favor Treasurys over CDs amidst rising interest rate concerns. 5. High-quality corporate bonds average roughly 5% yield while municipal bonds yield less than 4%.

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FAQ

Why Neutral?

The shift from CDs to higher-yield corporate and municipal bonds may signal mixed investor sentiment, but overall market conditions remain uncertain. Radically changes in fixed-income preferences typically show only gradual effects on broad indices such as SPY.

How important is it?

The article discusses broader economic trends, influencing investor behavior towards riskier assets. A steady move away from CDs could indicate long-term changes in liquidity preferences directly impacting SPY's options and equity assessments.

Why Long Term?

Interest rate cuts by the Fed could influence investment behaviors long-term as cash allocations reassess shorter-term securities. Past Fed policies initiated similar shifts in asset classes, causing gradual reallocations of funds into equities over time.

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