It’s been the ultimate no-brainer for more than a year: Park your money in super-safe Treasury bills, earn yields of more than 5%, rinse and repeat. Or as billionaire bond investor Jeffrey Gundlach put it last October, “T-bill and chill.”
Governments in the US and other developed countries, thanks to their central banks, may be deluded over how much debt they can pile up without significantly raising their costs to borrow.
The end of the Federal Reserve’s balance-sheet unwind is in sight, though its actual conclusion depends on the pace of interest-rate cuts and stresses in funding markets.
As Federal Reserve officials prepare for an in-depth conversation about its balance sheet at next week’s meeting, Wall Street strategists can only agree that all of the plans being discussed by the central bank carry some growing risks.
Federal Reserve Bank of New York President John Williams said he doesn’t see a need for officials to tighten policy further and reiterated that he expects the central bank to cut rates later this year.
When Brookline Bancorp Inc. needs to borrow short-term cash quickly — part of the regular course of business for the Boston-based lender — it has a range of options. One source of cheap money it’s loath to turn to, however, is the Federal Reserve for fear of setting off alarm bells.
The Federal Reserve is trying to find the right time to start deliberating about how it will extract itself from its balance sheet unwind, a signal that the end might be closer than previously expected.
The growing gap between the rate on the Federal Reserve’s nascent funding facility and what the central bank pays institutions parking reserves suggests officials will let the program expire in March, according to Wrightson ICAP.
As markets staged a monster rally following the Federal Reserve’s shift toward loosening monetary policy, one corner of the financial system had reason to remain on edge.
A push by US regulators to rein in the Federal Home Loan Banks risks casting broad ripples through the US financial system, increasing costs to banks by pulling a major force from the nation’s funding markets.
Everyone — from moms and pops to corporate treasurers and the mega asset managers — is piling in, won over by a unique opportunity: To lock in a 5% yield, and protect themselves from uncertainty over the US economy.
The government has issued an eye-watering $1 trillion in Treasury bills since the debt ceiling was suspended in early June. So far, the market hasn’t batted an eye.
Tucked away in hours of congressional testimony by Federal Reserve Chair Jerome Powell last month was an admission that the central bank was blindsided by the impact of shrinking its balance sheet four years ago.
The US Securities and Exchange Commission is set to impose a slate of new rules on money-market mutual funds, setting up a potential clash with titans in the $5.5 trillion industry.
The US money-market industry, one of the big winners on Wall Street as the Federal Reserve hiked interest rates, is getting another lift with more tools at its disposal to attract investors and expand its unprecedented mountain of cash.
Looming behind market fears over the prospect of a historic US default is the less-discussed risk of what would follow a deal to resolve the debt-ceiling impasse.
Investors are zeroing in on key parts of the market for short-term dollar borrowing to determine if and how signs of systemic stress might be emerging after the biggest US bank collapse in over a decade.
For the first time in nearly two decades, investors can earn more than 5% on some of the safest debt securities in the world. That’s competitive with riskier assets like the S&P 500 Index.
The US Treasury’s quarterly financing estimates due next week will be closely watched to gauge the department’s view on how the debt-ceiling drama will unfold.
The US Treasury won’t buy back government debt to shore up market functioning before May 2023, if ever, analysts are saying.
The long-simmering idea that the US government should stand ready to buy back Treasury securities from investors to improve market functioning is moving closer to reality.
With the Federal Reserve releasing minutes from its latest meeting on Wednesday, traders are looking for further details on the plans to let billions of dollars worth of bonds to mature each month without replacing them.
The imminent return of the U.S. debt ceiling is causing angst for money-market traders once again.
More and more, investors are wondering whether the Federal Reserve will tweak its monetary policy toolkit to help out money markets that are starting to drown in a sea of cash.
The Treasury’s bill auctions Thursday drew the lowest yield in more than a year as an excess of cash in front-end of fixed-income markets kept borrowing costs anchored near zero.
Traders in short-term funding markets are already busy assessing the potential impact of the U.S. debt ceiling coming back into force in the second half of this year even as Congress trains its focus on more immediate matters like finalizing President-elect Joe Biden’s victory this week.
