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The yield on the ten year treasury today hitting a record low falling below 2%.
For the first time have -- Incredible as investors flocked to treasuries for safety.
Is a smart move at these prices let's ask Bob -- -- Yeah see what -- 600 billion dollars in money market and bond assets for vanguard He is here and it Fox Business exclusive Bob.
When you're on a week ago Monday you said this would happen needs that you said the move to treasuries could continue for some time.
Will -- continue from here you think.
Well certainly -- number we saw today either Philly Fed release was just a brutal number I think V.
Initial reaction on a lot of trading desk was that somehow they had the -- four point all want it.
If that number is confirmed.
-- some of the ism.
Our releases later this could be the first indicator we have if the economy's moving into negative growth.
Territory and in that situation unfortunately we could probably still you see yields move somewhat lower.
Negative growth -- in a recession Bob what are the other parts of the bond market telling you as well in terms of how.
Jump bonds have -- have reacted recently and today in corporate bonds -- they signaling.
Concerns as well.
That has as far as taxable bonds are concerned has been the under performer.
This year by by quite a bit what even investment grade bonds are getting hit and particular what we're seeing.
Over the last so while it's been going on for more than a few days there is a European Bank bonds getting hit are just looking.
A couple minutes ago I had a index of credit default swaps all of European banks.
And the spread on that and hired a spread means -- more credit risk that the markets looking at is higher than in 2000 and it.
Do you believe that the situation is as dire as it was in 2008 and terms of the ability for these financial institutions to fund themselves.
No idea I really don't think that's the case do it really got ugly in the fourth quarter of 2008.
And I think we have to remember.
That US banks have built up a lot of capital -- since then.
European banks are behind on the curve when it comes to building capital would that said they're in better shape -- radio were before so I don't really think this situation is.
Completely analogous to what happened.
In the fourth quarter 2008.
What do you tell investors -- Bob about the risks bits and prime money market funds in this country is people bring it up -- that.
These -- not government money market signs.
But people talk about half of assets broadly speaking are in the debt of European banks do you think that the risk is real.
Now -- I got you I mean.
When it comes to money market funds outside of treasury government funds there's always some risk and we've always said that in the prospectus but that that said.
While money market funds have been and in general in the industry have.
Been pushing to stay away from the banks have been in trouble we have in -- buying these banks for years in and -- years.
And I think the focus is on the part of all money market funds is -- do good credit and now.
-- -- What do you think is the safest place to put your money right now if they -- college on the phone over the weekend which gotten very while -- -- say Bob.
What where should I put my money right now -- would you tell me.
Well that's a tough question because you're safety has to perspectives.
To a number one is credit risk.
What's that the second is interest rate risk my big concern right now.
Is there was yields so low stated you would buy in the marketplace right at the moment and are rates going have to spike up a little bit.
To where the negative price return -- completely offset the located low coupon income that you.
You get by buying a bond right now so as -- hard to find think about -- being safe.
That said if you -- me to a point I've probably.
Maybe five years and in right now I'm not a lot of yield but.
They -- -- principal stability I do use the word relative.
Bob it was great to see -- promise I won't call you over the weekend that because I get to visit with you during the wait.
And I really appreciate you taking the time is always you're here last week -- after we lost -- triple -- credit rating in you were here today.
On a historic day for treasuries Bob thank you so much Bob our.
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