Latest news with #T-bills
Reuters
5 days ago
- Business
- Reuters
Stablecoins' step toward mainstream could shake up parts of US Treasury market
June 6 (Reuters) - As stablecoins take a step toward becoming mainstream, some segments of the U.S. Treasury market, notably securities with short-term maturities, could be vulnerable to volatility as they become more closely tied to the world of cryptocurrency. Congress is poised to pass legislation establishing a regulatory framework for stablecoins, expected to help legitimize the dollar-pegged cryptocurrencies which are commonly used by crypto traders to move funds between tokens. Proponents of the bill argue that clear rules will spur further stablecoin activity, and support a growing sector of buyers of short-term U.S. government debt, or T-bills, that are typically considered cash-equivalent securities. But others worry a larger footprint for a relatively new and more volatile industry could in turn spur volatility in the bills market. "In the event of a sudden loss of confidence, regulatory pressure, or market rumors, this could trigger large-scale liquidations, potentially depressing Treasury prices and disrupting fixed-income markets," said Cristiano Ventricelli, vice president and senior analyst of digital assets at Moody's Ratings. "A problem in the stablecoin sector could spill over into broader financial markets, affecting institutions holding similar assets or (that) rely on stablecoin liquidity," he added. If signed into law, the stablecoin bill would require tokens to be backed by liquid assets - like U.S. dollars and short-term Treasury bills - and monthly disclosures from issuers on the composition of their reserves. That means if stablecoins are expected to grow, issuers will have to purchase more T-bills to back their assets. The bill could be passed by the Senate as early as next week and could eventually increase the amount of U.S. Treasuries held by stablecoin issuers such as Tether and Circle, the latter of which debuted on the NYSE on Thursday. They together hold $166 billion in U.S. Treasuries, according to a report by Bain & Company's financial services practice. The stablecoin market, currently about $247 billion according to crypto data provider CoinGecko, could grow to $2 trillion by 2028 if legislation were to pass, Standard Chartered estimated. U.S. Treasury Secretary Scott Bessent encouraged lawmakers to pass legislation to codify federal rules for stablecoins, arguing that it could lead to a surge in demand for U.S. government debt. Currently, there are about $29 trillion in Treasury securities outstanding, of which $6 trillion are bills. In an April research note, JP Morgan analysts estimated that stablecoin issuers could become the third-largest buyer of Treasury bills in the coming years. That raises red flags for some, who worry that would lead to closer ties between the crypto ecosystem and the traditional financial world. The Treasury Borrowing Advisory Committee, a group of banks and investors that advise the government on its funding, said in a study in April that growth of the stablecoin market at the expense of bank deposits could reduce banks' demand for U.S. Treasuries, as well as have an impact on credit growth. "If (stablecoin issuers) have to move those Treasuries quickly, or the market demands that, it could create some credit crunches there," said Mark Hays, associate director for cryptocurrency and financial technology at Americans for Financial Reform. Hays said this assumes that stablecoins become more widely used after legislation passes. Money market funds, which invest in short-term debt, could be impacted. Money market expert Pete Crane, president of Crane Data, said money funds are watching stablecoin closely but the size of the market would have to become significantly bigger to create concerns over financial stability. "Treasury bills are normally so short (in maturity) that people don't concern themselves with price movements, but of course in case of a rapid liquidation the price is going to go down," he said. Issues with stablecoins have not so far been large enough to cause systemic problems but the calculus could shift if federal legislation were to spur widespread adoption. In 2022, a meltdown in the crypto markets sent Tether's stablecoin below its dollar peg, which caused no impact on the Treasury market. At the time, then-U.S. Treasury Secretary Janet Yellen said stablecoins like Tether didn't pose a systemic risk to the financial system because they were too small in scale. In 2023, Circle's USD Coin also lost its dollar peg after the company revealed it held a portion of its reserves at failed Silicon Valley Bank. Circle and Tether declined comment. Still, some argue that there could be benefits from increasing demand for government debt. "If we pass stablecoin legislation, dollars will be exported around the world, which will extend the strength of the dollar as the world's reserve currency," said Matt Hougan, chief investment officer at Bitwise Asset Management, a crypto asset manager. Roger Hallam, global head of rates at Vanguard, said higher demand for short-term government debt instruments could incentivize the Treasury Department to increase T-bill issuance, rather than long-dated debt, to cover its deficit funding need. Yields of long-dated U.S. debt have been rising recently, partly due to concerns over the country's fiscal health. "You could choose to issue more bills to meet that demand, which would relieve some of the tensions we currently see in the market ... around the scale of future issues and who's going to buy all these bonds," Hallam said.
Int'l Business Times
02-06-2025
- Business
- Int'l Business Times
Investors Follow Warren Buffett to Ramp Ultrashort Treasury Bets as Longer-Term Bills Face Volatility
Investors are more attracted to the ultrashort fixed-income market opportunity as the iShares 0-3 month Treasury bond ETF and the SPDR Bloomberg 1-3 Month T-Bill ETF witnessed inflows of over £18.47 billion ($25 billion) in assets in 2025. Meanwhile, Vanguard's short-term bond ETF witnessed inflows of more than £2.95 billion ($4 billion) year-to-date. The emerging investor trend of preferring the shorter end of the fixed-income market aligns with Warren Buffett's Berkshire Hathaway doubling its ownership of T-bills to own 5% of all short-term Treasuries. BondBloxx CEO Joanna Gallegos told CNBC that volatility is less on the "short and middle end" with stable yields, but bond jitters remain on the long end as the 20-year treasury has 'gone from negative to positive five times so far this year.' The 3-month T-Bill is paying 4.345% at an annualised rate, while the two-year treasury is at 3.9% and the 10-year at around 4.4%. The current bond market volatility comes nine months after the US Federal Reserve started trimming interest rates. However, the Fed has paused its campaign due to concerns about inflation rising again on the US government's tariff play. Moreover, market concerns about federal spending and government deficit levels have further fueled the volatility in the bond market. Strategas Securities' Todd Sohn said that 'long duration just doesn't work right now,' citing long-term treasuries and corporate bonds have recorded negative performance since September 2024, which happens to be a rare phenomenon. 'The only other time that's happened in modern times was during the Financial Crisis,' he said. 'It is hard to argue against short-term duration bonds right now.' The ETF specialist added that he recommends that clients avoid any bond instruments with a duration above seven years. Investors Overlooking Fixed-Income Assets in Their Portfolios Gallegos is worried that investors are not adequately prioritising fixed-income instruments in their portfolio mix amid the bond market volatility. 'My fear is investors are not diversifying their portfolios with bonds today, and investors still have an equity addiction to concentrated, broad-based indexes that are overweight certain tech names. They get used to these double-digit returns,' she said. US stock market volatility peaked this year after the S&P 500 jumped to record highs in February but tanked 20% in April amid the tariff episode before rebounding to make up for all the recent losses. While Sohn acknowledged that bonds are a crucial part of long-term investing and offer a hedge against stock market volatility, he now thinks it might be time for investors to explore options beyond the US. 'International equities are contributing to portfolios like they haven't done in a decade,' he said. 'Last year was Japanese equities, this year, it is European equities. Investors don't have to be loaded up on US large-cap growth right now,' he said. The S&P 500 posted over 20% returns in 2023 and 2024, but the iShares MSCI Eurozone ETF has gained 25% YTD, while the iShares MSCI Japan ETF jumped over 25% in the last two years and is up 10% in 2025. Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns. Originally published on IBTimes UK
Zawya
29-05-2025
- Business
- Zawya
Central Bank of Egypt auctions $1.80bln T-bills on Thursday
Cairo – The Central Bank of Egypt (CBE) announced treasury bills (T-bills) worth EGP 90 billion through two issues on Thursday, 29 May. The first tranche stood at EGP 45 billion, holding a tenor of 182 days on 2 December 2025, according to official data. With the same value, the second offering will mature in 364 days on 2 June 2026. Earlier this week, on 25 May, the CBE auctioned T-bills at an aggregated value of EGP 75 billion through two offerings. All Rights Reserved - Mubasher Info © 2005 - 2022 Provided by SyndiGate Media Inc. (
Zawya
22-05-2025
- Business
- Zawya
Central Bank of Egypt offers $1.40bln T-bills end-week
Cairo – The Central Bank of Egypt (CBE) auctioned treasury bills (T-bills) at a combined value of EGP 70 billion through two tranches on Thursday, 22 May. The first tranche stood at EGP 30 billion and will mature in 182 days on 25 November 2025, according to official data. The second auction was valued at EGP 40 billion, holding a tenor of 364 days until 26 May 2026. On 18 May, the CBE offered T-bills at a total value of EGP 75 billion through two issues. All Rights Reserved - Mubasher Info © 2005 - 2022 Provided by SyndiGate Media Inc. (
Zawya
19-05-2025
- Business
- Zawya
Central Bank of Egypt unveils $1.5bln T-bills on Sunday
Cairo – Mubasher: The Central Bank of Egypt (CBE) issued treasury bills (T-bills) at a total value of EGP 75 billion through two auctions on Sunday, 18 May. The first issue was valued at EGP 35 billion, holding a tenor of 91 days until 19 August 2025, according to official data. The second auction stood at EGP 40 billion and will mature in 273 days on 17 February 2026. On 15 May, the CBE auctioned T-bills worth EGP 80 billion through two tranches. All Rights Reserved - Mubasher Info © 2005 - 2022 Provided by SyndiGate Media Inc. (
