About Bonds

A good cause for pause is deciding whether to rent or buy. In the current economy, some people think renting is best because it affords time to save, assess and make a composed decision. But buying also has advantages. Home prices are extremely low. The recession has put pressure on sellers to part with their property. This is opening the market up to attractive deals. But the most important thing is to make the decision based on your personal financial situation. It's the only way to make the right decision.

As so many have said, a return to economic growth depends on working financial markets, and thereâ''s been recent progress in several areas, including with banks, short-term funding, corporate markets, and securitization markets.

The number of so-called problem banks is elevated and likely to keep climbing. However, thereâ''s been some better news from the banking industry. For instance, the Supervisory Capital Assessment Program, also known as stress tests, has provided us with a better handle on the capital buffer the largest banks would need to remain well capitalized and able to lend if the economy performs worse than expected.

Following up on the stress test results, the Federal Reserve Board on Monday announced that the 10 banks required to bolster their capital have submitted plans to meet their requirements. Then on Tuesday, the U.S. Treasury announced that 10 of the largest institutions participating in the capital purchase program had met requirements to repay the government for the Troubled Asset Relief Program (TARP) funds provided to them. I view these developments as signs that the banking system is healing, and rising confidence in the banking system is justified.

Markets for short-term funding also have improved, including the interbank lending markets and commercial paper markets. Spreads between the London Interbank Offered Rate (LIBOR) and the overnight index swap rate have declined to levels that are close to precrisis levels.

Corporate bond issuance has increased recently. Although U.S. Treasury rates have been on the rise, spreads between Treasury yields and rates paid by corporate borrowers have narrowed somewhat. Overall, the cost of capital for highly rated businesses has come down.

Finally, as regards securitization markets, the asset-backed securities (ABS) market collapsed in 2008 but this year has begun to gradually revive with the aid of public programs designed to jump-start the securitization markets.

Issuance of new ABS, including credit card, auto and student loans, and equipment leases, has totaled more than $40 billion since the Fed launched the Term Asset-Backed Securities Loan Facility (TALF) in March. This activity is still far short of the $200 billion annual ABS issuance before the financial crisis, but it represents a marked improvement from last year. Furthermore, risk spreads on ABS have been declining steadily this year and should help ease the cost of credit for both households and businesses.

While credit market functioning has improved, the picture Iâ''ve just painted of our current economic environment is framed with caution. At this point, thereâ''s still a debate about whether business activity has reached a bottom.

So there you have it, living in the city is largely dependent on the economy. If you plant to move in the near future, be sure to work with a professional. It's the only way to move.

About the Author:

Michael Russell writes about a variety of subjects. This article discusses downtown Atlanta apartments. For more information, visit Promove.