Rising yields fatten Americans’ pocketbooks

livemint.com:

mutual fund treated by most investors like bank accounts as a safe place to store spare cash. They hold only high-quality liquid assets such as Treasurys and, in some cases, short-term corporate debt. The funds recently paid an average interest rate of 5.15%, according to Crane Data, the highest level since 1999.

And they aren’t the only source of succor to savers. Savings accounts at many banks are now paying above 4%—after years in which many paid next to nothing. The torrent of cash reflects the continuing strength of the U.S.

economy, whose continued expansion has prompted the fastest pace of Fed interest-rate increases in decades. The yield on the 10-year Treasury note settled Friday at 4.251%, near its highest level since 2008. For consumers and businesses, higher short-term interest rates are giving them a chance to do something they haven’t since the days before the 2008 financial crisis: park money in safe places and get paid well for it.

“I can earn 5% on cash doing nothing, versus risking losing a bunch in the market," said Yaacov Teplow-Phipps, a 42-year-old who works in real estate in Briarcliff Manor, N.Y. The high rates on offer from many financial institutions, together with the recent decline of interest rates and the home-refinancing wave of 2021, mean that U.S. consumers are better off than they have been in some time.

That fact helps to explain why the economy continues to perform months after many economists and investors confidently predicted a 2023 recession, which for now seems to be on hold. Similar to many Americans, Teplow-Phipps said he locked in a low rate on his mortgage years ago. He’s still spending money, dishing out cash for things such as camp for his children and fixing up the windows