Traders piled into the 1-month T-bill on Thursday, causing the rate to plummet over 40 basis points as concerns over the impending debt ceiling crisis grew. The sudden drop in the rate of the T-bill has made it an attractive option for investors looking for a safe haven for their money. In fact, the yield on the 2-month U.S. Treasury bill jumped on Tuesday to its highest level since at least 2018, according to Refinitiv.
When deciding where to keep cash, one consideration is how much of a return you can earn on your balance. High-yield savings accounts have traditionally been a popular choice, but experts say investors may be able to generate attractive, short-term returns as the Fed continues to raise rates. T-bills are a great option for those looking for a low-risk investment with a high return.
U.S. Treasury bills, also known as T-bills, are government debt obligations with maturities of one year or less. They are auctioned off by the U.S. Treasury Department and are considered one of the safest investments in the world. T-bills are often used as a benchmark for short-term interest rates and are closely watched by investors.
The surge in T-bill rates comes as investors grow increasingly concerned about the debt ceiling. The U.S. government is set to hit its borrowing limit in the coming weeks, and if a deal is not reached, the country could default on its debt. This has caused investors to flock to safe-haven assets such as T-bills.
Despite the surge in T-bill rates, experts warn that investors could still lose money if there is a historic spike in inflation. The safest investment in the world may be paying more than it has since 2007, but investors need to be aware of the risk associated with investing in T-bills.
In addition to the debt ceiling crisis, economic data coming out of China and Russia's military exercises in Japan are also contributing to the volatility in the market. Investors are looking for safe-haven assets to protect their portfolios against any potential market turbulence.
Savings rates have continued to go up this year, making it an ideal time for investors to store their savings and earn interest. However, with the potential for inflation and market volatility, investors need to carefully consider their options.
Treasury bonds are another option for investors looking for long-term, fixed-income investments. These government securities have a 20-year or 30-year term and pay a fixed interest rate on a semi-annual basis. While they are considered safe investments, they are not as liquid as T-bills and may not be suitable for short-term investments.
In conclusion, the surge in T-bill rates amid concerns over the debt ceiling highlights the importance of safe-haven assets in an uncertain market. While T-bills offer a high return with low risk, investors need to be aware of the potential risk associated with investing in them. As always, it is important for investors to carefully consider their options and consult with a financial advisor before making any investment decisions.