T-Bill Deluge Ahead? Why This Portfolio Manager Thinks US Could Have Its Own Bank Of England Moment
Portfolio Pulse from Bhavik Nair
Otavio Costa, a portfolio manager at Crescat Capital, believes the US could have its own Bank of England moment as the Federal Reserve may have to buy Treasury Bills as a last resort due to a deluge of bonds expected to hit the market. The Treasury Department is expected to sell more than $1 trillion of debt papers through the end of Q3.
May 30, 2023 | 8:00 am
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NEGATIVE IMPACT
The iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY) lost 0.45% over the last month as the US may face a Bank of England moment due to a deluge of bonds hitting the market.
The anticipated deluge of bonds hitting the market may lead to the Federal Reserve buying Treasury Bills as a last resort, which could negatively impact the short-term performance of the iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY). The ETF has already lost 0.45% over the last month, and the situation may worsen if the Fed intervenes.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:VGSH) lost 0.5% over the last month as the US may face a Bank of England moment due to a deluge of bonds hitting the market.
The anticipated deluge of bonds hitting the market may lead to the Federal Reserve buying Treasury Bills as a last resort, which could negatively impact the short-term performance of the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:VGSH). The ETF has already lost 0.5% over the last month, and the situation may worsen if the Fed intervenes.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80