Benzinga - by Piero Cingari, Benzinga Staff Writer.
Treasury bills, those often-overlooked short-term securities, are back with a bang. Treasury yields are surpassing the 5% mark for maturities spanning from one month to two years. This resurgence is enticing investors to shift their funds from stagnant bank accounts and into the world of cash-like securities.
Once dismissed by retail investors in favor of higher-risk ventures, T-bills are enjoying their renaissance.
The catalyst? The Federal Reserve’s decision to increase rates. The campaign brought about more than 550 basis points of rate hikes in just the past year and a half.
This shift has rekindled the allure of T-bills. They provide a refuge for those who seek attractive returns without delving into the turbulent waters of more volatile assets.
Chart: Yields Are Exceeding 5% For Treasury Securities With Maturities Up To 2 Years
Retail Investors Flock To T-Bills As Cash Becomes King Again
Fast-forward to today, T-Bills are once again emerging as the stars of the financial stage. Their robust yields are attracting even the most risk-averse investors.
As the Federal Reserve continues its rate hikes, risk-free assets like T-bills become increasingly appealing, particularly in contrast to the meager returns provided by traditional bank accounts.
The resurgence of T-bills is unmistakably evident in the market, with investors snapping up over $1 trillion in new notes within just three months, according to Bloomberg. Government auctions have witnessed record demand, as noncompetitive bidders, typically smaller investors, have embraced the prospect of secure yields without the risks of competitive bidding.
With T-bills crossing the 5% threshold, retail investors have dusted off their TreasuryDirect accounts, opting for short-dated securities over stagnant bank accounts with minimal interest earnings.
Notable bond ETFs investing in Treasury bills are iShares 0-3 Month Treasury Bond ETF (NYSE:SGOV), Goldman Sachs Access Treasury 0-1 Year ETF (NYSE:GBIL) and SPDR Bloomberg 3-12 Month T-Bill ETF (NYSE:BILS).
Read more: Investors Bet $7B On Ultra-Short Term Bond ETFs, Chase 5% Returns Amid Market Volatility
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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