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Investment Watch

July 14, 1996

Banks and S&Ls have been raising yields on certificates of deposit fairly consistently since winter, but savers aren't responding. Federal Reserve Board data show that the nationwide total in small CDs (those under $100,000) has actually dropped since January, from $935 billion then to $928 billion now. Meanwhile, assets in short-term savings accounts (passbooks and money market deposit accounts) have risen from $1.14 trillion on Jan. 1 to $1.21 trillion now. The trends suggest that despite higher yields on CDs, many savers have been opting to keep their funds very liquid rather than make a commitment. The next question: Could some of that free cash be lured into stocks, if share prices keep falling?

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