2024-04-07 22:17:48 ET
Summary
- Predictions of rate cuts by the Federal Reserve have decreased due to low unemployment and signs of an inflationary rebound.
- Short-term Treasuries in the ETF SGOV are expected to have increased benefits and pay a 5%+ yield for at least a year.
- SGOV is a valuable asset for investors with extra cash. It pays a premium above inflation and is not affected by interest rate changes.
- If inflation is undercounted, the SGOV's after-tax return is still likely below inflation, supporting the rise in gold prices.
- A closer look at economic data points to an oil or services-driven inflationary rebound and prolonged labor market strain among high-quality jobs.
Going into 2024, most investors assumed the Federal Reserve would cut interest rates this year. However, over the first quarter, predictions of rate cuts have backed off, stemming from a low unemployment rate and a rebound in some inflationary signals. As a result, the potential benefits of low-risk assets like short-term Treasuries in the ETF ( SGOV ) have likely risen, with the fund anticipated to pay a 5%+ yield for at least a year from now....
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SGOV: The Federal Reserve May Not Cut Rates In 2024