Cash Is a Star in Rocky Year for Global Markets

U.S. cash and cash equivalents are on track to be some of the best-performing assets in 2018.

Tuesday’s market rout shows that cash is back.

After years of favoring stocks in general and the fastest-growing, riskiest shares in particular, many investors are embracing asset classes that promise to hold their value through a period of volatility that analysts expect to persist into next year and beyond.

On Tuesday the Dow industrials tumbled 799.36 points, or 3.1%, the latest stage of a twisting autumn retreat from riskier investments. The yield on the 10-year U.S. Treasury note tumbled to its lowest level in three months, reflecting rising prices as purchasers sought the safety of government bonds.

Traders said the latest stock pullback reflected a sense that trade tension would continue to shadow markets in coming months, at a time when tightening Federal Reserve policy and softening economic indicators are getting more attention.

Those concerns and the impact of higher interest rates are making it easier to justify putting some funds on the sidelines, investors said. That marks a sharp contrast from much of the postcrisis era, in which cash in the bank or in other low-risk destinations generated next to no return.

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