What to do with your money?

Mortgage Bonds are currently trading 31 basis points lower this morning, as Stocks rebound a bit after this week's equity washout. Stocks are higher after news that the Federal Reserve authorized a $180 billion expansion of its swap lines with other world central banks in a bid to ease the credit crunch and restore a sense of calm in the financial markets. The funds, which will be provided by the Federal Reserve, can be injected into money markets through overnight and term loans. Stocks are liking this news so far and this is pressuring Bonds.

There is a lot of panic out there. People are very worried about their life savings. Is money in the bank safe? How about if it is in a life insurance policy? How about in bonds? Unfortunately the answer is no, no, no. Yesterday, the panic reached a level that caused such a demand on Treasuries, that the total return of some short-term paper went negative. That's right...the premium paid was higher than the return provided by the yield. So keeping your cash under the mattress is better than an investment in some Treasuries, and apparently safer than the financial market. Suddenly, guess what may become the most attractive way to protect your money? Think about it...you can touch it, get a tax break, live in it too. Yes, Real Estate is starting to look pretty good, especially since it has become more reasonable priced.

In other news, the Initial Jobless Claims report met expectations and suggests continued weakness in the labor market.