2024-02-01 07:34:55 ET
Summary
- Treasury Bill ETF BIL is an excellent reward-for-risk asset with a yield above 5% and virtually no risk.
- The yield curve suggests prolonged higher interest rates, though a 75 bps cut is priced into the short-term curve.
- The S&P 500 is historically a poor investment when its earnings yield is so low compared to real Treasury bonds.
- With the yield curve steepening from an inverted position, stocks, and long-term bonds are unlikely to deliver attractive returns.
- Nobody will get rich with BIL, but it should offset price growth, making it an ideal "buy and wait for the crash" investment.
The Treasury Bill ETF ( BIL ) is my most significant portfolio today, mostly comprised of short-term bonds. In the past, short-term bonds were a poor investment choice, with meager yields, almost always below the inflation rate. Today, these funds usually pay a yield above 5% with effectively no risk. Of course, as when I covered the fund last , there is an ongoing risk BIL faces temporary issues due to political factors. However, I continue to believe this is a very low probability outcome....
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BIL: Yield Curve Steepening Indicates Low Rate Cut Risk