It was another week of wild swings on Wall Street. But buried under all of the 24/7 media coverage of the last week, there were a number of additional reports worthy of attention.
Last Tuesday, the Treasury Department sold $32 billion in 3 year notes at 0.5% yield -- the lowest ever for that maturity. The very next day, Treasury sold $24 billion in 10 year notes at 2.14% yield, the lowest level ever recorded. These records were set after S&P downgraded the U.S. debt. NOTE: After.
On Wednesday, a report from MarketWatch and FactSet Research revealed that cash and short-term investments for 24 of the 30 companies in the Dow Jones Industrial Average surged 18% to $256 billion from a year ago.
So what does all this mean and what does it have to do with our top priority of creating private sector jobs?
It is clear that there is a "flight to safety" in the markets. Gold (which set new records) and Treasuries benefitted from being viewed as safe investments. For major companies, ready cash is the safest way to ride out whatever lies on the road ahead.
To be clear, there is no single explanation for what is causing this flight to safety. Investors and businesses alike are clearly concerned about a double-dip recession, the sovereign debt problems (and their impact on banks) in Europe, and, yes, our own debt crisis here at home. But it is also the case that policy uncertainty in Washington is contributing to the unease about the economy and the future. People lack confidence in the economic policies of the Administration.
There is no doubt that it is critical that in the days and months ahead we do our best to minimize unnecessary uncertainty and adopt policies that will lead to economic security for the largest group of Americans possible.
Recommended Reading II: Now that we've started to get a handle on out-of-control government spending, there's more work to be done. Speaker John Boehner and House Majority Leader Eric Cantor outlined the challenges in this week's USA Today.