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If you purchase a 3m treasury bill, you will have to roll your capital into another in 3 months. If you expect the Fed to cut rates in the interim, you will rec
by nickles 7y ago
If you purchase a 3m treasury bill, you will have to roll your capital into another in 3 months. If you expect the Fed to cut rates in the interim, you will receive a lower yield on that bill. The discount on the bill helps compensate for that risk.
- inflatableDodo 7y agoI suppose the fed could cut rates in the next three months, however currently they are mostly making noises about not moving it up or down. Other people's current predictions on this are all over the place and seem more dependent on what each author would prefer than neccessarily any reality. I can find mainstream articles telling me why the fed must move rates up and others that insist that they must move them down. This makes me suspect that the fed is probably going to remain roughly fixed, at least for a bit.
- nickles 7y ago> Other people's current predictions on this are all over the place and seem more dependent on what each author would prefer than neccessarily any reality. Expectations of Fed rate hikes and cuts are reflected in the fed funds futures market, where participants estimate future values of the fed funds rate. Currently, the market implies a 94% chance of at least one rate cut by December [0]. [0] https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/ https://www.cmegroup.com/trading/interest-rates/countdown-to...
- jpalomaki 7y agoFinancial Times [1] points out the risk of trade war with China/Mexico and the economic slowdown this would cause is leading investors to expect Fed will have to cut rates. [1] https://www.google.fi/amp/s/amp.ft.com/content/855d23e2-83b7-11e9-b592-5fe435b57a3b https://www.google.fi/amp/s/amp.ft.com/content/855d23e2-83b7...