With 10-year yields at 1.5%, RBS head rates strategist William O'Donnell notes that the opportunity cost of holding cash is as low as it's ever been. "For those accounts that can't venture outside of the cash markets, I still think that cash is a good place to be rather than in debt," he says, adding that the real cost of cash is also falling as commodity prices drop. O'Donnell has been down on Treasurys since 10-year yields sank to 1.9%, and sticks to his warning that investors should not chase prices higher. Instead, he likes short-end USD swap spreads to bet on Europe's crisis deteriorating further.
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