Nacl01--I agree with your comments to Stanu and believe they are correct.
Stanu--while I believe interest rates may move a little lower over the next 6-12 months, i.e., Fed Funds rate and treasury yield curve, I believe the long-term trend will be for higher rates.
Intermediate term bonds are usually maturities of 3 to 5 or 7 years. I don't think I would buy anything longer than 3 to 4 years because you are not being compensated in yield for taking the longer term risk.
Stagflation is a combination of rising interest rates and high inflation with a "stagnant" economy. We last experienced this in the late 70s and early 80s. I believe it is in our future and we will see much higher interest rates. If you buy a long term treasury now that yields under 5%, if other long term treaurys in 2 years are yielding 7%, the value of your 5% treasury will be much lower.
Muncipal bonds have a history of very low defaults, under 1%, and most munis are insured today.
Frankly, I would stick with money market funds for any cash not invested in stocks.
Tmcal6
