WASHINGTON - For risk-averse investors who are getting nervous over the recent rumblings in U.S. financial markets, it is easy to make a strong case for taking shelter temporarily in cash or bonds.

The uneasiness in the markets has shown up in the Dow Jones industrial average's steady fall to a six-month low and the return of the yield on the Treasury 30-year bond to 7.50% on the Federal Reserve's failure to cut interest rates again.

Many investors, including major foreign players in U.S. markets, are anxiously awaiting the outcome of the election. If Bill Clinton is elected they will be waiting until late January and the new President's budget to see if he can come up with real numbers for reviving the economy while maintaining a semblance of fiscal discipline.

The picture in financial markets overseas is even more disquieting. Britain has apparently slipped back into a recession that began grinding away in 1989, and Italy's government is in a crisis brought on by soaring debt and a weak currency. The Exchange Rate Mechanism, Europe's effort to keep currencies and interest rates aligned, is temporarily out of order.

Europe is being dragged down by Germany's high interest rates, and the Bundesbank has given no signal that it will move again soon to lower them. Analysts are increasingly convinced that Germany is headed for stagnation as the strong mark forces up prices of exports, which account for 40% of German economic output.

In Japan, the government has announced and $89 billion government spending package to boost the flagging economy. But the program will take time to kick in, and Salomon Brothers analysts estimate growth this year will slip to only 1.4%, which is about the same as in the United States.

Canada, which also has an economy that is only crawling ahead, is troubled by a weak currency and a constitutional crisis over Quebec that forced the central bank to jack up short-term rates to 13.5%.

Russia, which doesn't count for much as a global economic power, is collapsing as production falls and soaring inflation makes the ruble nearly worthless.

Financial markets are likely to remain unsettled until the Bundesbank relents, something that may not happen until next year. Lower rates in Europe in turn are expected to allow the undervalued U.S. dollar to rise and give the Fed room to lower U.S. rates another notch if officials see the need.

Uncertainty in U.S. markets is likely to prevail until after the elections. Investors who want to play it super-safe until some time next year can still earn 3% on money-market accounts. That is nothing to brag about, but at least it means any investments will continue to hold their value until the political uncertainties in the U.S. and Europe are resolved.

Higher yields can be obtained on U.S. Treasury securities and municipal bonds by investors willing to lock up their money for a longer period. It is a play that has rewarded investors so far this year while stock funds have been sending people monthly statements with a minus in front of the bottom line.

Paine Webber Inc. is selling Virginia Southeast Public Utility bonds due in 20015 that are rated triple-A by Moody's Investors Service and Standard & Poor's Corp. The bonds sell at a par of 6%, which is the taxable equivalent of roughly 9.3% for high-income investors in the state. Triple-A rated bonds due in 20021 issued by the Metropolitan Washington Airport Authority sell at a par of 6 1/4%, and the taxable-equivalent yield is 9 1/2%.

"It's very difficult to beat municipal bonds at the moment," says Howell Posner, a sales executive at Paine Webber. He says the firm estimates taxable returns on stocks will rise only 9% in the next year, including re-investment of dividends.

Shearson Lehman Brothers is also pushing municipal bonds, noting that the current big supply is helping to keep prices low and yields high. The firm calculates that a Texas resident in the 31% tax bracket who buys a 6% municipal bond will earn the equivalent of 8.69% on a taxable investment. A resident of New York buying a 6% bond gets the equivalent of 9.44%.

These are pretty good yields for safe investments in uncertain times.

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