SGOV - SGOV: Fed On Hold
2024-04-29 22:39:13 ET
Summary
- The iShares 0-3 month Treasury Bond ETF invests in treasury bills.
- With inflation stubbornly high, the prospect for Fed rate cuts have dimmed considerably, which is a positive for SGOV as investors can earn high treasury bill yields for longer.
- I am raising SGOV back to a buy and believe it remains the best 'cash' asset to hold until further notice.
For new readers who are not familiar with my story, writing for Seeking Alpha is my retirement hobby. While other ex-professionals like to debate their views on social media platforms like X, I prefer to document my daily investment thoughts through articles on Seeking Alpha. I cannot promise to be always right (even the best investors only get 60% of their calls right), but I promise to be honest and will own up to my mistakes. As investors, I believe it is important be honest with ourselves and admit mistakes as early as possible, rather than let them fester and cause a loss in both capital and opportunity.
In January, I penned an article, "Skate To Where The Puck Is" , in which I advised investors holding very short duration investments like the iShares 0-3 Month Treasury Bond ETF ( SGOV ) and the WisdomTree Floating Rate Treasury Fund ETF ( USFR ) to consider lengthening their duration, as the Federal Reserve telegraphed three or more policy rate cuts in 2024. Since treasury bill yields closely follow Fed Funds rate, if the Fed were to cut the policy rate 3 or more times this year, then investors holding treasury bills-linked investments will likely see their incomes decline (Figure 1)....
SGOV: Fed On Hold