It's holiday time and we need some good news. The Fed has been trying to bring down interest rates for higher quality corporate debt. Is it working? The answer is yes. Already the risk premium for bonds of JP Morgan Chase, Bank of America and GE have fallen by a quarter point. New offerings by Disney and Safeway were priced at 5 percentage points above comparable Treasury yields. Even junk bonds saw a slight improvement.

The Fed's willingness to buy mortgage bonds had the effect of dropping their yields a quarter percentage point. This is on top of an already previous three quarter percentage point reduction. Rates of jumbo mortgages have dropped to 6.91% from 7.25%. Even debt yields issued by banks insured by the FDIC have dropped. Citigroup's post-bailout bonds, which were priced at 3%, are now trading at a yeild of 2%.

So, we do have a bit of cheer for the holidays.

So spooked by the market that you've withdrawn cash from your investments to stuff beneath your mattress? Or do you simply crumple every mutual fund statement without opening?

Yesterday as I sipped my coffee, Payson Swaffield, vice president and chief income investment officer of Eaton Vance of Eaton Vance (NYSE: EV) in Boston, shared with me by phone some current alternatives in fixed-income investments. There are two worlds of fixed-income investments (bonds, essentially), according to Swaffield. One is very low risk and low return. The other is slightly higher risk but has equity-like return possibilities.

First some definitions: A fixed-income instrument is an investment in a bond or another debt security issued by a government or government agency, such as Fannie Mae or Freddie Mac, a municipality, or a private enterprise. Fixed-income investments have traditionally provided lower volatility than equity investments as well as risk diversification, Swaffield says.

Bloomberg News reports that a measure of the risk that corporations won't make their bond payments is at record high levels. In 2006, it became clear that subprime mortgages might be in trouble and that their problems would hurt investors in mortgage backed securities (MBSs). Now there could be trouble in the $3.7 trillion corporate bond market.

How so? The CDX, or Markit CDX North America Investment Grade Series 9 Index, a benchmark gauge of default risk tied to the bonds of 125 companies including Countrywide Financial Corporation (NYSE: CFC), climbed 3.75 basis points to 100 basis points as of 8:15 a.m. this morning in New York. The index is at the widest since the CDX indexes started trading in 2004.

Despite denying bankruptcy rumors, bond buyers are not convinced that Countrywide will be able to stave off bankruptcy. Credit-default swaps on Countrywide moved deeper into distressed levels. Sellers of credit-default swaps were demanding 30% upfront and 5% a year for contracts protecting Countrywide bondholders from default for five years. That's up from 28% upfront and 5% a year at the close of trading yesterday.

Bear Stearns (NYSE:BCS) is trading down another 4% today and hit a 52-week low of $103.53. The company clearly had to blame someone for the hedge fund debacle, so co-President Warren Spector is out.

There is a fairly good chance that the damage from investing in mortgage-backed securities is not contained to Bear Stearns. And, there may be some very significant problems with private equity loans held by investment banks, many of them high-risk and high-yield. Today, American Home Mortgage Corp. became the latest casualty of the subprime meltdown, filing for Chapter 11 bankruptcy protection.

Mr. Spector may not be the last high-profile executive at an investment bank or money-center bank to lose his job.

A look at share prices may be an indications of where else there are problems, real or perceived. Lehman (NYSE:LEH) is down 25% over the last month, about the same amount as Bear Stearns. That would make the investment bank a good candidate for sacrificing an executive or two. Shares of Goldman Sachs (NYSE:GS) and Morgan Stanley NYSE:MS) are down much less.

In the bank sector, Wachovia (NYSE:WB) has taken the biggest hit in the stock market, falling about 13% in the last month. Mortgage loans must be viewed as an issue there. By way of contrast, shares at Bank of America (NYSE:BAC) are dropped only 4% during that same time.

Stock prices do not tell everything, but the market is not entirely misinformed. Over the next couple of weeks, there may be some more senior management people looking for new work.

Douglas A. McIntyre is a partner at 247wallst.com.