Treasury Glut: Can Investor Demand For US Bonds Keep Pace With Supply Increases?
Portfolio Pulse from Neil Dennis
The U.S. Treasury is expected to announce an increase in government bond supply on Jan. 31, raising questions about whether investor demand can keep pace. Demand for Treasuries dropped in late 2023, with yields peaking in October. However, demand has returned as the Fed's rate hike cycle appears to have peaked, and expectations of rate cuts have grown. Bank of America's Mark Cabana anticipates the Treasury will repeat the auction size increases seen in November. ETFs like iShares U.S. Treasury Bond ETF (GOVT), Schwab Short-Term U.S. Treasury ETF (SCHO), and Schwab Intermediate-Term U.S. Treasury ETF (SCHR) allow investors to track bond price movements. Despite concerns, auction performance has not consistently deteriorated, and a range of investors has shown improved demand for Treasuries.
January 25, 2024 | 2:09 pm
News sentiment analysis
Sort by:
Ascending
NEUTRAL IMPACT
The iShares U.S. Treasury Bond ETF (GOVT) is down 1.5% this year, reflecting the inverse relationship between bond prices and yields. With the expected increase in Treasury supply and improved demand, the ETF may experience volatility.
GOVT's performance is closely tied to U.S. Treasury bond prices, which are affected by supply and demand dynamics. The article suggests a balance between increased supply and returning demand, leading to a neutral short-term impact.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
The Schwab Short-Term U.S. Treasury ETF (SCHO) tracks bonds with one to three-year maturities. With the Treasury's expected supply increase, SCHO may see short-term price fluctuations.
SCHO is influenced by short-term U.S. Treasury bond yields, which are subject to change with supply adjustments. The article indicates a stable demand, suggesting a neutral impact on SCHO in the short term.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The Schwab Intermediate-Term U.S. Treasury ETF (SCHR) tracks bonds with around five-year durations. It may be impacted by the Treasury's supply changes and investor demand dynamics.
SCHR's performance is linked to intermediate-term Treasury bond yields. The article suggests that demand is keeping up with supply, which could lead to a neutral impact on SCHR in the short term.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70