The market is pricing in a 99% chance that the Federal Reserve will not raise interest rates at its meeting this week. But that doesn’t mean the U.S. central bank won’t raise rates later this year. After all, inflation is still well above the Fed’s target of 2%.
Regardless of what the Fed will do this week – or later this year – U.S. Treasury yields are up. The 2-year Treasury yield was trading at 5.075% as of midday Monday, according to CNBC. The 10-year Treasury note, meanwhile, yielded 4.357%.
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A Suite of Treasury ETFs With Varying Durations
For investors that want to add Treasuries to their portfolios, Vanguard has a suite of Treasury ETFs with varying durations. Those seeking short-duration Treasuries may want to consider the Vanguard Short-Term Treasury ETF (VGSH). VGSH invests primarily in high-quality (investment-grade) U.S. Treasury bonds and maintains a dollar-weighted average maturity of one to three years.
Those looking to go further out along the duration curve may want to look into Vanguard Intermediate-Term Treasury ETF (VGIT). VGIT targets IG Treasuries with an average maturity of five to 10 years
And for those who think long-term bonds are the better investment, there’s the Vanguard Long-Term Treasury ETF (VGLT) and the Vanguard Extended Duration Treasury ETF (EDV). VGLT invests in Treasuries with an average maturity of 10 to 25 years. EDV, meanwhile, targets extended-duration zero-coupon U.S. Treasury securities with maturities ranging from 20–30 years.
Vanguard’s CEO Tim Buckley said at Exchange 2023 that the firm’s goal is “to make sure we’re producing the top performing funds and ETFs out there.”
“We’ll wrap it with low-cost, scalable advice and deliver them on a world-class, digitally enabled platform,” he added. “And if you do that well and you can keep improving it, you’ll create value into the future.”
For more news, information, and analysis, visit the Fixed Income Channel.