It looks increasingly likely that the Federal Reserve has come to the end of its rate hike cycle. In fact, many believe that the U.S. central bank will begin cutting rates in 2024. According to BondBloxx, a scenario in which the Fed lowers rates would serve intermediate Treasuries well.
“We do not anticipate any further rate hikes by the Fed in 2024,” according to BondBloxx’s Fixed Income Market Outlook. “Instead, we expect the Fed will cut rates once or twice starting mid-year. This scenario would bode well for the performance of the belly of the U.S. Treasury curve next year.”
BondBloxx also advocates for investors to “consider extending duration to capture this potential opportunity.”
Capture Attractive Returns Through Intermediate Treasuries
With the Fed’s rate hike cycle possibly coming to an end, intermediate Treasuries could capture attractive total returns. So, investors looking to go slightly longer on the duration curve may want to look into BondBloxx’s intermediate-duration Treasury ETFs.
The BondBloxx Bloomberg Three Year Target Duration US Treasury ETF (XTRE), the BondBloxx Bloomberg Five Year Target Duration US Treasury ETF (XFIV), and the BondBloxx Bloomberg Seven Year Target Duration US Treasury ETF (XSVN) are three of eight duration-specific U.S. Treasury ETFs that BondBloxx offers.
Launched in October 2021 to provide precision ETF exposure for fixed income investors, BondBloxx now manages more than $2 billion in assets across 20 (soon to be 21) U.S.-listed ETFs. BondBloxx Co-Founder Joanna Gallegos said that U.S. Treasuries have been a great alternative to cash. They’re also a great way to capture as much yield as possible.
“It’s hard to walk away from a 5% risk-free yield,” she added.
For more news, information, and analysis, visit the US Treasuries & TIPS Fixed Income Channel.