Vanguard Short-Term Treasury ETF (NASDAQ: VGSH)

Ultime notizie per Vanguard Short-Term Treasury ETF (NASDAQ:VGSH)

Vanguard Short-Term Treasury ETF

The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays US Treasury 1-3 Year Bond Index. This index includes fixed income securities issued by the U.S. Treasury (not including inflation-protected securities), all with maturities between 1 and 3 years. At least 80% of the funds assets will be invested in bonds included in the index.

Vanguard Short Term Treasury ETF

On CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/04/18/final-trades-samsara-delta-air-lines-and-vgsh.html">Halftime Report Final Trades</a>,&#8221; Jim Lebenthal of Cerity Partners named Delta Air Lines, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DAL#NYSE">DAL</a>) as <a href="https://www.benzinga.com/news/earnings/24/04/38202532/delta-air-lines-analysts-boost-their-forecasts-after-upbeat-earnings">people are traveling</a>.
On April 10, Delta Air Lines reported better-than-expected first-quarter earnings. The airline reported a first-quarter 2024 operating revenue growth of 8% year-over-year to $13.748 billion and adjusted operating revenue of $12.563 billion (+6% YoY), beating the consensus of $12.57 billion. Adjusted EPS was 45 cents, above the consensus of 36 cents, according to data from <a href="https://www.benzinga.com/pro/">Benzinga Pro</a>.
SoFi&#8217;s Liz Young named Vanguard Short-Term Treasury Index Fund ETF Shares (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) as her final trade.
Don't forget to check out our <a href="https://www.benzinga.com/premarket">premarket coverage here</a>
Joshua Brown of Ritholtz Wealth Management said he is long on Samsara Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IOT#NYSE">IOT</a>). Loop Capital analyst Mark Schappel initiated coverage on Samsara with a Buy rating and announced a price target of $42.
On March 7, Samsara reported better-than-expected fourth-quarter financial results and issued FY25 guidance above estimates. The company posted adjusted earnings of 4 cents per share, topping market estimates of 3 cents per share. Sales came in at $276.3 million beating expectations of $258.306 million. Samsara said it sees FY25 adjusted earnings of 11 cents to 13 cents per share on revenue of $1.186 billion to $1.196 billion.
Price Action:
<ul>
<li>Delta Air Lines shares fell 0.1% to close at $47.85 on Thursday.</li>
<li>Vanguard Short-Term Treasury Index Fund ETF Shares slipped 0.1% during Thursday's session.</li>
<li>Samsara shares rose 0.1% to close at $31.01 during Thursday's session.</li>
</ul>
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Delta Air Lines, Samsara And More On CNBC's 'Final Trades'

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CNBC Halftime Report Final Trades: Samsara, Delta Air Lines, Vanguard Short-Term Treasury ETF

On CNBC&rsquo;s &quot;<a href="https://www.cnbc.com/video/2023/11/07/final-trades-meta-comcast-cisco-systems-more.html">Halftime Report Final Trades</a>,&quot; Liz Young of BNY Mellon Investment Management named Vanguard Short-Term Treasury Index Fund (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vgsh#NASDAQ">VGSH</a>) <a href="https://www.benzinga.com/trading-ideas/long-ideas/23/11/35636701/jim-cramer-says-this-tech-company-reported-a-dynamite-quarter-i-disliked-these-guys-for-"> as her final trade. </a>
Stephen Weiss of Short Hills Capital Partners picked Meta Platforms, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/meta#NASDAQ">META</a>).
Meta Platforms recently introduced a special bonus program for Instagram content creators to enhance their earning potential through <a href="https://www.benzinga.com/news/23/11/35637131/meta-launches-special-bonus-program-to-boost-instagram-creators-earnings">engaging posts and reels.</a>
Don&rsquo;t forget to check out our <a href="https://www.benzinga.com/premarket/"> premarket coverage here </a> 
Jason Snipe of Odyssey Capital Advisors named Comcast Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/cmcsa#NASDAQ">CMCSA</a>), which reported better-than-expected results for the third quarter.
Disney recently announced it will acquire the 33% stake in Hulu it did not own from NBC Universal, a <a href="https://www.benzinga.com/general/entertainment/23/11/35552470/disney-to-acquire-remaining-stake-in-hulu-heres-how-much-streaming-platform-could-be-worth-">unit of Comcast.</a>
Jim Lebenthal of Cerity Partners said Cisco Systems, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/csco#NASDAQ">CSCO</a>) has been flat for the last few months. That&rsquo;s a &quot;good entry point,&quot; he added.
Raymond James analyst Simon Leopold recently downgraded Cisco from Outperform to Market Perform.
Price Action: Meta shares gained 1% to close at $318.82, while Comcast shares fell 1% to settle at $42.04 on Tuesday. Cisco shares fell 0.3% to $53.13, while Vanguard Short-Term Treasury Index Fund gained 0.1% during Tuesday&rsquo;s session.
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Meta, Cisco, Comcast And More: CNBC's 'Final Trades'

With the Fed funds rate at 5.5%, its highest level since the early 2000s, the temptation of cash-like investments has never been more appealing, pushing investors to reconsider riskier <a href="https://www.benzinga.com/money/best-bond-etf">assets such as stocks.</a>
While the Fed may opt to press the hold button this month, the end of rate hikes has not been yet declared. Indeed, the possibility that interest rates could remain high for far longer than many predicted only a few months ago appears to be becoming more realistic.
The resilience of the U.S. economy in recent times has left many economists and analysts scratching their heads, prompting them to adjust their growth projections. 
This, in turn, has made the prospect of a looming recession seem even more remote. Consequently, we&#8217;ve witnessed a spike in U.S. Treasury yields, with the 2-year yield recently breaking the 5% barrier once more.
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/23/09/34276055/fed-scrambles-to-revise-2023-projections-as-us-economy-surges-beyond-expectations">Fed Scrambles To Revise 2023 Projections As US Economy Surges Beyond Expectations</a>
Chart: 2-Year Treasury Yield &amp; Fed Funds Rate
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="528" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf-1024x528.png" alt="" class="wp-image-102390" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf-1024x528.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf-300x155.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf-768x396.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf-1536x792.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/09/07092336/US02Y_2023-09-07_15-23-22_6cecf.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h2 class="wp-block-heading">Investors Flock To Short-Term Bond ETFs</h2>
The allure of cash-like investment options, now offering high returns, has gripped the attention of investors. 
<a href="https://www.benzinga.com/markets/bonds/23/08/34157617/investors-bet-7b-on-ultra-short-term-bond-etfs-chase-5-returns-amid-market-volatility">August saw an astonishing $7 billion flow into ultra-short bond ETFs</a>, marking a stark turnaround from the capital flight observed in the preceding four months. 
And as we step into the first week of September, the trend of cash-like ETFs attracting substantial investments remains steadfast.
Here are five short-term Bond ETFs that not only allow you to capture returns but also act as a protective shield against potential downturns in the stock market.
<ol>
<li>iShares 0-3 Month Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SGOV#NYSE">SGOV</a>) &#8211; Description: This ETF zeroes in on ultra-short-term U.S. Treasury bills, delivering an ultra-low-risk haven for stability-seeking investors. &#8211; Asset Under Management (AUM): $14.2 billion &#8211; Performance year-to-date: 0.2% as of Sept.7, 2023 &#8211; 1-month flows: $1.9 billion &#8211; 1-week flows: $220 million </li>
<li>Goldman Sachs Access Treasury 0-1 Year ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GBIL#NYSE">GBIL</a>) &#8211; Description: This ETF tracks U.S. Treasury securities with maturities of 0 to 1 year, presenting a short-term, low-risk investment avenue. &#8211; AUM: $5.99 billion &#8211; Performance year-to-date: 0.1% as of Sept. 7, 2023 &#8211; 1-month flows: $573 million &#8211; 1-week flows: $38 million </li>
<li>SPDR Portfolio Short Term Treasury ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPTS#NYSE">SPTS</a>) &#8211; Description: This ETF offers investors a portfolio of short-term U.S. Treasury securities, combining a low-risk profile with shorter durations. &#8211; AUM: $5.54 billion &#8211; Performance year-to-date: -0.69% as of Sept. 7, 2023 &#8211; 1-month flows: $64 million &#8211; 1-week flows: $127 million </li>
<li>iShares 1-3 Year Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NYSE">SHY</a>) &#8211; Description: This ETF provides exposure to U.S. Treasury securities with maturities spanning 1 to 3 years, offering a conservative option with slightly longer durations. &#8211; AUM: $26 billion &#8211; Performance year-to-date: -0.4% as of Sept. 7, 2023 &#8211; 1-month flows: $276 million &#8211; 1-week flows: $154 million </li>
<li>iShares 1-5 Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGSB#NYSE">IGSB</a>) &#8211; Description: This ETF grants investors access to a diversified portfolio of investment-grade corporate bonds spanning 1 to 5 years, striking a balance between corporate credit risk and relatively shorter durations. &#8211; AUM: $22.4 billion &#8211; Performance year-to-date: 0.2% as of Sept. 7, 2023 &#8211; 1-month flows: -$1.1 billion &#8211; 1-week flows: -$486 million</li>
</ol>

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Cash Is King: 5 Bond ETFs Unlocking Attractive Returns In A 5% Rate World

Traders appear to be backing out on the idea that the Federal Reserve will trim <a href="https://www.benzinga.com/news/23/06/32790467/imf-says-fed-may-need-to-push-interest-rates-higher-for-longer-inflation-does-remain-a-pressing-conc">rates this year</a>, as is apparent from the U.S. short-term interest-rates market, a report stated.
Options open interest, which shows the amount of risk held by traders, declined sharply across a number of strikes shown by preliminary CME data released Monday, <a href="https://www.bloomberg.com/news/articles/2023-06-26/traders-bail-on-fed-rate-cut-bets-on-powell-s-hawkish-message?utm_medium=social&amp;cmpid%3D=socialflow-twitter-economics&amp;utm_source=twitter&amp;utm_content=economics&amp;utm_campaign=socialflow-organic#xj4y7vzkg">reported</a> Bloomberg. This is a sign of capitulation following heavy pull-backs from rate-cut bets taken earlier, it said.
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The fears seem to be justified given the fact that Fed Chair Jerome Powell indicated the central bank could hike rates by another 50 basis points this year. He also reiterated the central bank's dedication to bring inflation down to the 2% goal, <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32951600/fed-is-focused-on-2-inflation-goal-despite-june-pause-in-interest-rate-hikes-powe">during his testimony</a> before the House Financial Services Committee.
Given the fact that services inflation continues to remain sticky and with the Fed reiterating its commitment to bring down inflation to its 2% target, a rate cut appears unlikely this year.
Price Action: Yield on the policy-sensitive two-year treasury notes was last trading at 4.69% — lower than the June highs of 4.81%. At the same time, swaps linked to Fed meetings are currently factoring in that the policy rate will peak after just one more 25-basis-point move, the report said. This, however, marks a stark shift from the expectations of rate cuts that were priced earlier.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) and the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) closed 0.07% higher on Monday, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
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Traders Unwind Fed Rate Cut Bets This Year After Powell's Hawkish Stance

Treasury yields rose during Wednesday Asian trading session ahead of Federal Reserve Chair Jerome Powell's <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32924024/powell-to-testify-before-congress-after-fed-pause-what-the-market-is-watching-for">testimony before Congress</a> and as U.K. inflation came in higher than expected.
Consumer Prices Index rose 8.7% from a year ago in May, <a href="https://www.bloomberg.com/news/articles/2023-06-21/uk-inflation-higher-than-expected-for-fourth-consecutive-month?leadSource=uverify%20wall">reported</a> Bloomberg citing the Office for National Statistics. Core inflation, which excludes volatile food and energy, rose unexpectedly to 7.1% from 6.8%, it said.
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Price Action: Yield on 2-year Treasuries rose as high as 4.74% compared to the lows of 4.66% seen on Tuesday, before cooling off a bit. Similarly, yield on 10-year notes rose to 3.76% against the lows of 3.7% seen the day before.
"We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living," Chancellor of the Exchequer Jeremy Hunt said in a statement, according to the report. "We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down."
The latest inflation figures come a day prior to the BOE's latest policy decision. Economists and investors are anticipating another 25 basis points increase in its key lending rate to 4.75%, the Bloomberg report said.
Earlier this week, bond markets across the world witnessed a decline as investors and traders began weighing-in the possibility of rate hikes continuing <a href="https://www.benzinga.com/news/23/06/32916660/fed-pause-aside-global-bond-sell-off-ahead-of-powell-testimony-put-pressure-on-treasuries-are-rate-h">for longer than expected</a>. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) gained 0.037% on Tuesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) rose 0.069%.
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Treasury Yields Rise As UK Inflation Comes In Higher Than Expected, Market Awaits Powell Testimony

Ahead of Federal Reserve Chairman Jerome Powell's testimony to Congress, Allianz chief economic adviser and noted economist Mohamed El-Erian said the <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32861662/powell-hits-the-brakes-after-10-straight-interest-rate-increases-but-fed-signals-">central bank chair's message</a> to the market was ‘confused and confusing.'
‘Confused because they said three things that are internally inconsistent. On the one hand, they increased the inflation forecast. They also increased the amount of hikes that they are anticipating. But on the other hand, they did not hike. So, that was an inconsistent set of outcomes,' he <a href="https://www.youtube.com/watch?v=LsFX6Qz7y-U">told</a> CNBC.
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El-Erian also highlighted the mixed reactions in the marketplace. ‘You have those who believe that this was a committee outcome. So, it is what a committee would come out when the chair is trying to please everybody and you end up in the muddle middle. There are those who think they are signaling a high inflation target and there are those who think they are making a mistake. You saw the divergence in the performance of the equity market and the bond market because of that. So, it is confusing and confused,' he said.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) gained 0.037% on Tuesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) rose 0.069%, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Last week, the <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32865053/fed-pauses-interest-rates-a-short-lived-break-or-the-end-for-the-hiking-frenzy-5-">Fed announced a pause</a> in its rate hike campaign but indicated it will hike rates by another 50 basis points this year. According to the economist, the stock market does not believe the central bank is going to deliver two hikes. ‘The equity market has interpreted last week as a pause, not a skip, a pause. Because when push comes to shove, they believe that this Fed will be less hawkish than the bond market believes. That is the big difference right now in the marketplace,' he said.
Fed's Anchoring: El-Erian also stated that data tends to be fluid and never gives a very clear direction on a consistent basis. ‘So, if you are overly data dependent, and you have heard me say over and over again, it is not clear what is the strategic anchoring of this Fed. It is not clear how it sees the economy,' he stated.
El-Erian also asserted the Fed's inflation target is too low and said a new target, if formulated, should be higher. ‘We are now living in a world of supply constraints and if we were to formulate a new inflation target, it will be higher than 2% — it will be more like 3%,' he said.
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Economics

El Erian Believes Powell's Message To Markets Was 'Confused And Confusing' — Says Fed's 'Strategic Anchoring' Unclear

Andreas Steno Larsen, Founder and CEO of Steno Research, believes the banking turmoil is far from over as persistent core inflation may keep <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32861662/powell-hits-the-brakes-after-10-straight-interest-rate-increases-but-fed-signals-">monetary policy tight in coming times</a>.
"Monetary policy is likely to remain tight as long as core CPI stays elevated, and with the metric being stuck at 5% annualized, it could be an argument to why Fed will keep rates high, which is the sole reason behind the latest banking turmoil," Larsen <a href="https://twitter.com/AndreasSteno/status/1670802504047644675">explained</a> in a series of tweets.
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May Consumer Price Index (CPI) rose 4% on an annual basis, registering the lowest increase in two years. However, Core CPI, which strips out energy and food, stood at 5.3%, somewhat higher than the 5.2% <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32838442/energy-driven-cpi-drop-in-may-contrasts-with-persistent-core-cpi-5-economists-specu">predicted by the Street</a>.
Apart from the fear of tight policy, the difference between money market fund rates and those offered by banks is also a cause of concern. Larsen explained that due to the way banks are run, they have no chance of competing with the rate that money market funds (MMFs) are offering. "And as long as the spreads stays wide, banks will slow-bleed. The smaller banks are likely to suffer from this, as confidence remains stronger at bigger banks," he wrote on Twitter.
Price Action: Bond markets are witnessing a decline across the world as investors and traders have begun weighing the possibilities of extended rate hikes due to persistent inflation. The yield on the 10-year U.S. treasury note rose as much as 3.82% before cooling off a bit during Tuesday&#8217;s Asian trading session. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) and the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) shed 0.14% on Friday, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Larsen also noted that as deposits leave banks, lenders will have to sell their assets, which have suffered from unprecedented rate hikes. "This is again mainly a matter of confidence, and deposits are likely to seek towards the big banks for cover," he said.
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This Macro Expert Explains Why Banking Turmoil May Be Far From Over — 'Monetary Policy Is Likely To Remain Tight...'

Treasury yields jumped during the Asian trading session on Tuesday following a global sell-off <a href="https://www.benzinga.com/news/23/06/32867625/feds-rate-hike-pause-fails-to-dissuade-traders-from-betting-on-a-recession-heres-why">in the bond market</a>. The decline emerged in the United Kingdom. where investors and traders weighed on the possibility of extended rate hikes due to sticky inflation, <a href="https://www.bloomberg.com/news/articles/2023-06-20/treasury-yields-jump-to-extend-global-bond-slide-before-powell?srnd=markets-vp&amp;leadSource=uverify%20wall">reported</a> Bloomberg. Market participants are also awaiting Federal Reserve Chairman Jerome Powell's testimony to Congress on Wednesday.
The yield on the 10-year U.S. treasury rose as much as 3.82% before cooling off a bit. Australian yields with the same maturity rose eight basis points to their highest this year, reported Bloomberg.
Markets had priced-in expectations that central banks would respond to signs of inflation cooling by softening their policy. However, policymakers remained aggressive on concerns that <a href="https://www.benzinga.com/news/23/06/32848536/ross-gerber-says-inflation-is-dead-fed-is-done-bye-bye-and-go-away">inflation may stay above their targets for too long</a>.
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Following last Wednesday's Fed policy announcement, Powell had asserted in his speech that not a single person on the committee wrote down a rate cut this year. "Nor do I think it is at all likely to be appropriate if you think about it. Inflation has not really moved down. It has not so far reacted much to our existing rate hikes. And so we&#8217;re going to have to keep at it," the<a href="https://www.benzinga.com/news/23/06/32868455/el-erian-believes-this-one-powell-statement-changed-perception-about-wednesdays-policy-to-hawkish-it"> Fed Chair had said</a>.
Price Action: The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) and the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) shed 0.14% on Friday, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
The bond market sell-off commenced with gilts or U.K. bonds declining on Monday prior to the release of the country's inflation data on Wednesday and the Bank of England's policy decision the following day, according to the Bloomberg report.
"While there is little doubt that the #BoE will increase interest rates on Thursday, there will be lots of views on the size of the hike and the policy guidance for what follows&#8211;as standalone, and in combination. Indeed, of the four major central banks, the BoE faces one of the trickiest sets of policy challenges," Allianz chief economic adviser and noted economist Mohamed El-Erian <a href="https://twitter.com/elerianm/status/1670702845308305411">said</a> in his tweet.
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Fed Pause Aside, Global Bond Sell-Off Ahead Of Powell Testimony Put Pressure On Treasuries: Are Rate Hikes Done Finally?

Major Wall Street indices soared on Thursday as investors and traders began digesting the possibility the Federal Reserve's aggressive rate hike campaign is nearing its end. The Nasdaq Composite closed Thursday's session 1.15% higher while the S&amp;P 500 gained 1.22% to <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32869159/morgan-stanleys-mike-wilson-says-profit-recession-still-underway-reiterates-3-900-y">hit their 14-month highs</a>.
Ross Gerber, President and CEO of Gerber Kawasaki Inc., believes the market has factored-in that the economy will not tip into a recession. "Rally rally as the new bull market gores more bears. Market is saying no recession and the Fed is done. The fed knows that higher rates will only kill more banks&#8230; you could see it in Powell&#8217;s face&#8230;," he <a href="https://twitter.com/GerberKawasaki/status/1669422043065106432">said</a> in his tweet.
The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 1.24% higher while the Invesco QQQ Trust Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) rose 1.19%.
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Economic Data: Following the rate hike pause by the Fed, economic data released Thursday also helped lift market sentiment. The number of Americans applying for unemployment benefits increased by 262,000, in the week ending June 10, flat from a revised higher 262,000 the previous week and more than the projected 249,000, <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32873374/unemployment-claims-exceed-expectations-yet-robust-retail-sales-indicate-resilien">according to the U.S. Department of Labor</a>. This strengthened the argument against the central bank raising rates going ahead.
"The good news is that when the Fed does lower rates, this will work well to stimulate the economy. Hence the market rally, tons of capital will come back to work with lower rates," Gerber <a href="https://twitter.com/GerberKawasaki/status/1669425250109640704">said</a> in his tweet.
The expert also highlighted the yield on the two-year treasury bill, which is a policy-sensitive paper, arguing why there is a case for trimming rates. "The 2 yr at 4.63% is showing which way the Fed needs to be moving rates. ITS NOT UP!" he said in his tweet.
After hitting the highs of 4.8% earlier this week, the 2-year treasury yield fell to as low as 4.63% before settling in at 4.66% on Thursday. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) gained 0.21% on Thursday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) rose 0.19%, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
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Ross Gerber Explains Thursday's Rally — 'Market Is Saying No Recession…'

Peter Schiff, chief economist and global strategist at Euro Pacific Capital, said he doesn't believe in the hype on the Federal Reserve&#8217;s <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32861662/powell-hits-the-brakes-after-10-straight-interest-rate-increases-but-fed-signals-">hawkish pause on rates</a>.
"If the #Fed really was hawkish it wouldn&#8217;t have skipped this rate hike. There&#8217;s a good chance that the Fed&#8217;s next move on rates will be a cut, not because #inflation is lower, but because the labor market finally cracks," Schiff <a href="https://twitter.com/PeterSchiff/status/1669044698537664513">said</a> in his tweet.
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The economist's comments follow the central bank announcing a pause in its rate hike campaign after ten successive increases to tackle decades-high inflation. What did appear as a point of concern was the Fed's indication it may hike rates by another 50 basis points this year.
Another interesting fact from the policy was Fed Chairman Jerome Powell's skepticism on the matter of rate cuts which managed to raise eyebrows among market participants, <a href="https://www.benzinga.com/news/23/06/32868455/el-erian-believes-this-one-powell-statement-changed-perception-about-wednesdays-policy-to-hawkish-it">leading to a hawkish perception</a>. "&#8230;it will be appropriate to cut rates at such time as inflation is coming down really significantly and again we&#8217;re talking about a couple years out," Powell had said Wednesday.
Powell asserted in his speech that not a single person on the committee wrote down a rate cut this year. "Nor do I think it is at all likely to be appropriate if you think about it. Inflation has not really moved down. It has not so far reacted much to our existing rate hikes. And so we&#8217;re going to have to keep at it," the Fed Chair said.
On Rate Pause: Schiff believes the Fed Chair's decision to pause the rate hike does not make sense given the fact that Fed still acknowledges the upside risks to inflation. "Powell is clearly worried about the evolving financial crisis but doesn&#8217;t want to spook markets. So he&#8217;s done hiking, but doesn&#8217;t want to admit it," Schiff <a href="https://twitter.com/PeterSchiff/status/1669056873868173316">said</a> in his tweet.
Although major Wall Street indices ended in the green following the Fed's policy announcement, bond traders seemed to be raising their bets on the probability the central bank will likely tip the U.S. economy into a recession. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 0.06% on Wednesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.05%, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
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Peter Schiff Dismisses Hawkish Fed Pause Hype — Says Good Chance 'Fed's Next Move On Rates Will Be A Cut'

Allianz chief economic adviser and noted economist Mohamed El-Erian has highlighted the one quote by Federal Reserve Chairman Jerome Powell which he thinks made many people perceive Wednesday's policy as hawkish despite <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32863171/powell-keeps-hawks-at-bay-signals-fed-is-near-destination-stocks-rebound-s-p-500-">the pause in rate hikes</a>.
"&#8230;it will be appropriate to cut rates at such time as inflation is coming down really significantly and again we&#8217;re talking about a couple years out," Powell had said Wednesday.
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El-Erian said the statement is the reason why many have described Fed's pause in rate hikes as hawkish after ten successive increases. "It is also the one that has most raised eyebrows given that the [Fed] has insisted that it's data dependent and the Chair characterized forecasts as highly uncertain," he tweeted.
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Re the <a href="https://twitter.com/hashtag/FederalReserve?src=hash&amp;ref_src=twsrc%5Etfw">#FederalReserve</a>'s press conference, this is one of the quotes that has attracted the most attention. It is the reason why so many have described as hawkish today's pause in rate hikes after ten successive increases. It is also the one that has most raised eyebrows given… <a href="https://t.co/rxeuIGfJgu">pic.twitter.com/rxeuIGfJgu</a>
&mdash; Mohamed A. El-Erian (@elerianm) <a href="https://twitter.com/elerianm/status/1669084195241484290?ref_src=twsrc%5Etfw">June 14, 2023</a></blockquote>
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Powell asserted in his speech that not a single person on the committee wrote down a rate cut this year. "Nor do I think it is at all likely to be appropriate if you think about it. Inflation has not really moved down. It has not so far reacted much to our existing rate hikes. And so we&#8217;re going to have to keep at it," the Fed Chair said.
Yield Curve: Bond traders appeared to be increasing their bets on the probability the central bank will likely tip the U.S. economy into a recession as is apparent from the <a href="https://www.benzinga.com/news/23/06/32867625/feds-rate-hike-pause-fails-to-dissuade-traders-from-betting-on-a-recession-heres-why">steepening of the yield curve inversion</a>. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 0.06% on Wednesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.05%, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
"Once again, the #Fed's press conference resulted in considerable market volatility. Also of note: The further considerable inversion in the 2s-10s yield curve (currently at minus 92 basis points)," El-Erian said in his tweet.
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El-Erian Believes This One Powell Statement Changed Perception About Wednesday's Policy To Hawkish — It Got 'Most Raised Eyebrows'

Bond traders appeared to be increasing their bets on the probability the Federal Reserve will likely tip the U.S. economy <a href="https://www.benzinga.com/news/23/06/32849806/ken-griffin-sees-opportunity-in-this-segment-as-he-anticipates-recession-were-much-more-cautious-abo">into a recession as</a> is apparent from the steepening of the yield curve inversion. Bloomberg had earlier reported the story.
Despite the central bank <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32845535/june-fed-meeting-how-could-markets-react-to-the-rate-decision-and-powells-comment">pausing its rate hike campaign</a> for the first time since it began its aggressive monetary policy cycle, the Fed's indication that it could raise rates by another 50 basis points this year led to a sell-off in policy-sensitive short-dated securities, causing a rise in yields. At the same time, yields on long-dated bonds fell pushing the yield-curve inversion between two and 10-year yields to over 90 basis points, <a href="https://www.bloomberg.com/news/articles/2023-06-15/treasury-curve-flashes-renewed-warning-of-excessive-tightening?leadSource=uverify%20wall">according</a> to Bloomberg.
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Expert Take: George Goncalves, head of US macro strategy at MUFG told Bloomberg the Fed runs the risk of solving one policy error of being too easy for too long with another policy error as they ignore the growing credit contraction and persistent losses from higher rates. "The catch-22 is that for them to ease, something now has to break or the economy has to crack," he said.
The two-year yield touched as high as 4.8% before cooling down to 4.71% on Wednesday. At the same time, the 10-year yield touched a low of 3.77% from the high of 3.85% this week. A yield-curve inversion is considered a precursor to the possibility of a recession.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 0.06% on Wednesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.05%, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Michael Cudzil, portfolio manager at Pacific Investment Management Co. told Bloomberg the Fed was clearly trying to send a hawkish message that they are not quite done yet and don't think they have made enough progress on inflation. "You see curve flattening and rates not pricing in the full extent of hikes, so the thinking is that these hikes may bite and the Fed is closer to the end," he said.
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Fed's Rate Hike Pause Fails To Dissuade Bond Traders From Betting On A Recession — Here's Why

Ross Gerber, President and CEO of Gerber Kawasaki Inc., believes that with inflation cooling down, the Federal Reserve's rate <a href="https://www.benzinga.com/news/23/06/32829124/el-erian-sees-fed-having-three-primary-options-for-interest-rates-ahead-believes-none-is-optimal">hiking cycle is likely to come to an end</a>.
"INFLATION IS DEAD. With the broken shelter number being the largest contributor to inflation, this number is actually negative IRL. Fed is done, bye bye and go away!" Gerber tweeted.
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">INFLATION IS DEAD. With the broken shelter number being the largest contributor to inflation, this number is actually negative IRL. Fed is done, bye bye and go away!
&mdash; Ross Gerber (@GerberKawasaki) <a href="https://twitter.com/GerberKawasaki/status/1668642465686126592?ref_src=twsrc%5Etfw">June 13, 2023</a></blockquote>
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May Consumer Price Index (CPI) rose 4% on an annual basis, the lowest in two years. Core CPI, which strips out energy and food, <a href="https://www.benzinga.com/markets/23/06/32841599/inflation-cools-in-may-ahead-of-fed-meeting-reinforcing-thoughts-a-pause-could-be-ahead">rose 0.4% in May</a>.
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Price Action: Wall Street cheered the numbers as expectations of the Fed pausing its rate hiking cycle in its June policy gained momentum. The Nasdaq Composite closed 0.83% higher while the S&amp;P 500 gained 0.69%. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 0.66% higher on Tuesday while the Invesco QQQ Trust Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) rose 0.77%.
"Bull market in full roaring mode today and with so many short or on the sideline, the next year looks nice, until the election gets close&#8230;," Gerber <a href="https://twitter.com/GerberKawasaki/status/1668642968289550337">said</a> in his tweet.
However, the bond market appears to be maintaining caution ahead of the central bank's policy outcome. The two-year treasury yield was trading close to 4.66% on Tuesday compared to the lows of 4.33% seen in early June. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 0.18% on Tuesday while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.17%, according to Benzinga Pro.
Gerber also indicated price rises will cool down going further. "Next month inflation will be at 3%. And when the correct shelter number is appropriately applied&#8230;," he tweeted.
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Ross Gerber Says Inflation Is Dead: 'Fed Is Done, Bye Bye And Go Away!'

Hedge funds continue to extend their short positions on short-term Treasury Bills at a time when there is a widespread opinion that the Federal Reserve's rate <a href="https://www.benzinga.com/news/23/06/32810562/larry-summers-says-economy-remains-very-very-hot-calls-us-an-underlying-4-5-5-inflation-country">hiking cycle may not be over yet</a>.
Leveraged investors increased their net-short two-year Treasury positions for an eleventh straight week in the period to June 6, <a href="https://www.bloomberg.com/news/articles/2023-06-12/hedge-fund-bond-bears-are-relentlessly-shorting-treasuries?srnd=markets-vp&amp;leadSource=uverify%20wall">reported</a> Bloomberg citing the latest Commodity Futures Trading Commission figures. That's the longest run on record according to data going back to 2006, it said.
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Yields on two-year treasury notes are already trading higher by about 96 basis points from the lows seen in early May. However, they are yet to reach the highs of over 5% seen in early March — just prior to the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32808708/peter-schiff-stokes-fears-with-renewed-warning-about-banking-system-its-insolvent-a">banking crisis in the United States</a>.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 1.08% while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 1.09% during the period, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Expert Take: Andrew Ticehurst, rates strategist at Nomura Holdings Inc. in Sydney told Bloomberg investors are signaling rates will have to hold at a higher level for longer than previously thought. 
"Central banks are not yet done: rates are still going to go up a little bit, and we have already had a little bit of a scare last week already with the Reserve Bank of Australia and Bank of Canada raising rates unexpectedly," he said.
Goldman Sachs Group Inc. indicated the market impact of any pause by the central bank this week will likely be short-lived. 
"Absent a recession, we remain skeptical that the amount of easing currently priced will be realized," Goldman strategists including Praveen Korapaty wrote in a note, according to the report.
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More Rate Hikes Ahead? Hedge Funds Keep Shorting T-Bills Relentlessly

Despite calls from many corners that the <a href="https://www.benzinga.com/news/23/06/32791629/franklin-templetons-sonal-desai-says-the-upcoming-recession-will-differ-from-2008-financial-crisis-n">possibility of a recession</a> has eased, some of the world's biggest bond managers are reportedly sticking to their forecasts for a downturn and advise hedging any bets on risky assets.
The bond managers believe 10 consecutive rate hikes by the Federal Reserve have already done the damage while the U.S. banking collapses were a precursor to a bigger crisis as <a href="https://www.benzinga.com/news/23/06/32708241/imf-md-kristalina-georgiev-thinks-fed-isnt-done-with-rate-hikes-we-are-in-an-exceptionally-uncertain">central banks continue to stay hawkish</a>.
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Steve Ellis, global fixed-income chief investment officer at Fidelity International <a href="https://www.bloomberg.com/news/articles/2023-06-11/biggest-bond-managers-say-us-recession-is-inevitable-bucking-goldman-s-call?utm_campaign=socialflow-organic&amp;cmpid%3D=socialflow-twitter-economics&amp;utm_source=twitter&amp;utm_content=economics&amp;utm_medium=social#xj4y7vzkg">told</a> Bloomberg that something akin to a credit crunch is what he is most concerned about. Central banks' continued tightening shows they're fighting last year's battle, he stated.
Ellis has built up positions in government bonds with a view that when central banks pause or pivot, the assets will outperform. He expects the 10-year yield to drop to 3% as markets begin to realize the recession will be deeper, the report said.
Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IEF#NASDAQ">IEF</a>) lost 2.54% in the last month. The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) shed 1.08% while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 1.09% during the period, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
According to Mike Riddell, a portfolio manager at Allianz Global Investors, stocks, bonds and corporate debt are mispricing the risks and only inflation-rate swaps have got the economic outlook correct.
"Our base case is for a moderate-to-deep recession — and potentially crises — as the unprecedented pace of global policy tightening seen over the last year starts to really bite," Riddell said. The portfolio manager recommends being bullishly positioned in rates and bearishly positioned in risk assets, the report stated.
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iShares Trust Barclays 7-10 Year Treasury Bond Fund

Recession Fears Still Looming? Why Bond Mangers From Allianz To Fidelity Still Worry About A Downturn

Peter Schiff, chief economist and global strategist at Euro Pacific Capital said investors are wrong to think U.S. Treasuries will provide a <a href="https://www.benzinga.com/news/23/06/32684650/treasurys-debt-ceiling-acrobatics-can-now-end-after-bill-sails-through-the-senate">safe haven in current times</a> and has warned they do not understand the real issue.
"If you&#8217;re hiding out in Treasuries because you&#8217;re worried about the #economy, #banks, or an over-valued #StockMarket, you don&#8217;t understand the real problem. You&#8217;re correct to be concerned, but wrong to think there&#8217;s any safety in Treasuries. Don&#8217;t be fooled by nominal yields," Schiff <a href="https://twitter.com/PeterSchiff/status/1664305430401802240">said</a> in his tweet.
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Treasury yields declined on Thursday on reports of an extended fall in new manufacturing orders and lower labor costs, reported Reuters. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was hovering close to 4.35% according to the latest data available at the time of writing. This is lower than the levels close to 4.63% seen last week.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) closed 0.16% higher while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) gained 0.18% on Thursday, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Despite the fall in yields, a looming concern for the bond market is the barrage of T-Bill issuances as the government ramps up its borrowing following the debt ceiling saga. As massive supply hits the market, short-term yields <a href="https://www.benzinga.com/news/23/05/32618783/t-bill-deluge-ahead-why-this-portfolio-manager-thinks-us-could-have-its-own-bank-of-england-moment">are expected to go higher</a>.
Bullion: At the same time, spot gold was trading 0.15% higher at about $1,980 per ounce levels during the Friday afternoon Asian trading session. Schiff opined that the rally in bullion is a sign that the recent correction in the commodity is over.
"Today&#8217;s strong #gold rally, in the face of a much &#8220;stronger&#8221; than expected ADP #jobs report, is a good sign the recent correction is over. All of the weak longs have likely been flushed out, leaving them to watch from the sidelines as mining #stocks take off for new highs," Schiff <a href="https://twitter.com/PeterSchiff/status/1664290505843421185">said</a> in his tweet.
Private businesses recorded an increase of 278,000 jobs in May, a slight dip from the revised figure of 291,000 in April but significantly surpassing the expected 170,000, as reported by Automatic Data Processing Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ADP#NASDAQ">ADP</a>) on Thursday.
Indeed, gold mining stocks like Barrick Gold Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GOLD#NYSE">GOLD</a>), Newmont Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEM#NYSE">NEM</a>), Agnico Eagle Mines Ltd (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AEM#NYSE">AEM</a>) and Gold Fields Limited (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GFI#NYSE">GFI</a>) gained on Thursday.
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32679152/non-farm-payrolls-preview-could-another-hot-jobs-report-influence-next-feds-actions">Non Farm Payrolls Preview: Could Another Hot Jobs Report Influence Next Fed&#8217;s Actions?</a>

GOLD

Gold Bull Peter Schiff Not Impressed About Perceived Safety In Treasuries — 'You Don't Understand The Real Problem'

Dwindling cash reserves were reportedly forcing the Treasury Department to adopt fresh maneuvers almost on a daily basis. However, with the passage of the bill in the Senate, the Treasury can now heave a sigh of relief. The legislation was cleared on Thursday night with 63 votes <a href="https://www.benzinga.com/economics/macro-economic-events/23/06/32684531/senate-passes-debt-ceiling-bill-bidens-signature-will-seal-the-deal">in favor and 36 votes against it</a>.
The Treasury had said Thursday that while it's "tentatively" intending to proceed with its regular auctions of three- and six-month bills next Monday, it may have to postpone them if Congress does not pass the legislation by that time, <a href="https://www.bloomberg.com/news/features/2023-06-01/debt-ceiling-deadline-tracker-fresh-contortions-by-the-treasury?srnd=premium#xj4y7vzkg">reported</a> Bloomberg. 
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On Wednesday, Treasury Secretary Janet Yellen's department announced it was making available an extra $1.9 billion worth of extraordinary measures through a complex debt-swap maneuver. The amount of cash with the Treasury shrank to just $37.4 billion on May 30, the least since 2017, the report said.
Price Action: The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) gained 0.05% in the last five days while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) rose 0.09%, according to Benzinga Pro.
The Senate was under terrific pressure to approve the bill before Monday when Treasury Secretary Janet Yellen had estimated the federal government will run out of funds. All 100 senators had reached an agreement to debate up to 11 amendments and then promptly vote on passing the legislation, according to Reuters.
The House passed the debt ceiling deal on Wednesday night with a total of 314 votes in favor<a href="https://www.benzinga.com/economics/macro-economic-events/23/05/32662042/hurrah-house-passes-debt-ceiling-deal-biden-urges-senate-to-pass-legislation-quic"> of the bill and 117 votes against it.</a>
Read Next: <a href="https://www.benzinga.com/markets/equities/23/06/32684180/tesla-broadcom-u-power-chargepoint-lululemon-why-these-5-stocks-are-drawing-investor-attention-t">Tesla, Broadcom, U Power, ChargePoint, Lululemon: Why These 5 Stocks Are Drawing Investor Attention Today</a>

Treasury's Debt Ceiling Acrobatics Can Now End After Bill Sails Through The Senate

Otavio Costa, a portfolio manager at Crescat Capital, believes the United States is primed to have its own Bank of England moment given that the Federal Reserve may have to end up buying Treasury Bills as a last resort. 
This is because a deluge of bonds is anticipated to hit the market in the coming times as the Treasury Department ramps up its borrowing <a href="https://www.benzinga.com/news/23/05/32480292/wall-streets-trillion-dollar-headache-will-arrive-when-debt-ceiling-crisis-gets-resolved-heres-how">following the debt ceiling deal</a>.
Costa <a href="https://twitter.com/TaviCosta/status/1663260980082769920">noted</a> in his tweet that in the past, lack of inflation concerns, foreign investors&#8217; demand for Treasuries, absence of bank failures and the Fed's ultra-dovish stance allowed the market to smoothly absorb the growing debt supply without significant disruptions.
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However, given the adverse macro environment, the emergence of a supply-side problem requires much greater attention, he said.
Borrowing: The Treasury Department is expected to soon replenish its coffers by selling more than $1 trillion of debt papers through the end of the third quarter. The U.S. cash stockpile, or the Treasury General Account, will surge to $550 billion as of the end of June and reach $600 billion three months later, <a href="https://www.benzinga.com/news/23/05/32611576/biden-mccarthy-may-have-agreed-on-debt-ceiling-but-heres-why-a-barrage-of-t-bills-is-bad-news-for-ho">according to a report</a>.
Costa pointed out that foreign investors have not been net purchasers of U.S. Treasuries despite the substantial influx of issuances lately. 
"The current lack of demand is indeed a growing problem that may ultimately necessitate the intervention of the Fed as the buyer of last resort," he said in his tweet.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) lost 0.45% while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.5% over the last month, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
BoE Moment: The portfolio manager highlighted the historic sell-off of U.K. gilts or bonds in 2022 triggered by a tax reduction announcement. Bond market volatility had ramped up after former U.K. Prime Minister Liz Truss announced a bold stimulus program that included <a href="https://www.benzinga.com/markets/bonds/22/09/29054313/bank-of-england-begins-purchasing-u-k-bonds-to-stabilize-market-10-year-u-s-treasury-rates-hit-4">tax cuts and investment incentives</a>.
The situation had forced the Bank of England to reverse its quantitative tightening course and intervene as a buyer of U.K. bonds, he noted. "In our strong opinion: The U.S. is primed to have its own BOE moment," Costa said.
Read Next: <a href="https://www.benzinga.com/news/23/05/32617728/why-larry-summers-says-debt-ceiling-deals-irs-provisions-are-a-grave-error-desperately-hope-it-will">Why Larry Summers Says Debt Ceiling Deal&#8217;s IRS Provisions Are A &#8216;Grave&#8217; Error: &#8216;Desperately Hope It Will Not Set A Precedent&#8217;</a>

T-Bill Deluge Ahead? Why This Portfolio Manager Thinks US Could Have Its Own Bank Of England Moment

With President Joe Biden and House Speaker Kevin McCarthy reaching a <a href="https://www.benzinga.com/government/23/05/32610557/biden-says-good-news-for-america-as-president-kevin-mccarthy-agree-on-tentative-debt-deal-to-avert-c">tentative deal on the borrowing limit</a>, the bond market's concerns seem to have shifted from the possibility of default to the deluge of Treasury Bills expected to hit the market, impacting short-term borrowing rates.
The Treasury Department is expected to soon replenish its coffers by selling more than $1 trillion of bonds through the end of the third quarter, reported Bloomberg. With such a massive supply of paper hitting the market and with yields already trending on the higher side due to the Federal Reserve's aggressive monetary policy, short-term yields are likely to shoot up significantly in the coming days.
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This would also have an impact on households. As Treasury competes with banks for cash, the lenders may see their short-term funding rates increase. This may force them to increase their lending rates to households and businesses, the Bloomberg report said.
Interestingly, Bank of America Corp. analysts have forecasted it would have the same economic impact as a 25 basis points interest rate hike, according to the report.
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SHY#NASDAQ">SHY</a>) lost 0.43% while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGSH#NASDAQ">VGSH</a>) lost 0.48% over the last five days, <a href="https://benzinga.grsm.io/xjrx9r9ce0uu">according to Benzinga Pro</a>.
Expert Take: Kevin Flanagan, head of fixed income strategy at Wisdomtree Investments told Bloomberg there will be a knee-jerk reaction in T-bills as that area of the market has borne the burden of uncertainty. "So yields come down from their highs, but because the Treasury will increase issuance, there is a floor in yields for that market," he said.
The U.S. cash stockpile, or the Treasury General Account, will surge to $550 billion as of the end of June and reach $600 billion three months later, the report said citing the department's estimates at the beginning of the month.
According to Efrain Tejeda, a short-term interest rate strategist at Morgan Stanley, T-bill issuance will amount to $730 billion over the next three months and about $1.25 trillion over June through December, the report said.
Read Next: <a href="https://www.benzinga.com/news/23/05/32610130/major-bank-demands-customers-prove-withdrawals-are-valid-warns-cash-can-be-refused-at-will">Major Bank Demands Customers Prove Withdrawals Are Valid, Warns Cash Can Be Refused At Will</a>

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