DULUTH, Ga. — With the two-year Treasury note recently falling 26 basis points to hit a three-year low coupled with jittery investors retreating from the stock market, some credit unions are mulling over what to do with their investable funds.
"Fear is the ruling determinant for investment decision making today," said Sarina Freedland, assistant vice president of investment services at Georgia Central Credit Union, speaking to attendees at the corporate's latest bi-weekly member market call.
"When yields fall, the immediate instinct is to invest longer term to provide some protection against those falling rates," Freedland said. "But today's unsettled markets require a break from traditional practice. The more plausible trade for now is to stay short and put cash in corporate certificates, which often yield above market."
Certificates under six months are yielding between 4.80 and 4.97%, Freedland said, adding other CD programs are providing "attractive" one and two-year rates.
What's driving investment fears is a lack of credibility stemming from the subprime mortgage crisis, Freedland explained.
"Lenders are simply afraid of what is hiding under the next borrower's balance sheet."
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