In a world where cash is once again king, investors are turning their attention to cash-like funds and ETFs. One universe garnering notable interest is the U.S. Treasury market, where yields on short-term bonds have climbed to levels not seen in nearly two decades.
As of now, the annual yield on U.S. Treasury bonds, particularly those with maturities of up to two years, hovers around 5%. To put this into perspective, it’s the highest yield these securities have offered since June 2007 and is currently well above the latest annual inflation rate of 3.7%.
What’s remarkable about this return is that it comes from one of the safest assets in the world — U.S. Treasury securities.
Why Short-Term Treasury ETFs Are The Safest Assets On The Planet
These bonds, which are issued by the federal government, are highly regarded for their safety due to the fact that they are backed by the unwavering trust and creditworthiness of the U.S. government. Regardless of the prevailing economic conditions, whether it be during a recession, periods of inflation, or even times of conflict, the U.S. government remains steadfast in fulfilling its commitments to bondholders.
The yields on the shorter end of the Treasury yield curve are often dubbed “risk-free.” This label stems from the clear-cut expectation that the U.S. government will fulfill its obligations upon maturity.
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