Latest news with #TreasuryInflation-ProtectedSecurities
Yahoo
30-07-2025
- Business
- Yahoo
US Treasury keeps notes, bonds auction sizes steady, increases debt buybacks
By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -The U.S. Treasury Department said on Wednesday it does not anticipate increasing auction sizes for notes and bonds for at least the next several quarters, in line with market expectations, as it announced a $125 billion refunding from August to October 2025. It will, however, continue to make incremental increases to the size of Treasury Inflation-Protected Securities (TIPS) and T-bill auctions. "We use T-bills as a shock absorber for unexpected, seasonal or short term variations in borrowing needs as part of our regular and predictable issuance plan," a senior Treasury official said in a call with reporters on Wednesday. "That's because we believe ... changes in borrowing needs and addressing them in the people market is the most effective way to borrow at the least cost over time because of the ability of that market to absorb those kind of short-term changes. We think that the level of bill issuance offered today is very consistent with those plans and has helped us in light of the changes." In a statement, department will further sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week. These were the same auction sizes for the same securities announced at the February refunding. The Treasury also announced it will double the frequency of long-end nominal buybacks and increase the size of cash management buybacks, all aimed at improving liquidity in the market. The changes to the buybacks will take effect on August 13. "The Treasury will be focusing more on bill supply and they are trying to help market liquidity by increasing the sizes and frequency of buybacks, especially in the long end of the curve," said Gennadiy Goldberg, head of U.S. rates strategy, at TD Securities in New York. "So net net, this should be slightly positive for the long end." Long-dated Treasuries briefly rallied after the refunding announcement, pushing their yields lower. But their yields were last higher on the day as the initial impact from the refunding was muddied by the strong U.S. gross domestic product number. U.S. 10-year yields were last up 4.4 basis points at 4.372%. The Treasury announced that it's increasing the frequency of liquidity support buybacks in both the 10- to 20-year and 20- to 30-year nominal buckets to four times per quarter from two currently. But it will keep the current $2 billion maximum purchase per operation in both sectors. With respect to the other nominal coupon pairs, the department will continue to conduct one liquidity support operation per quarter for up to $4 billion. All told, the changes will lift total size of liquidity support buybacks from a maximum par amount of $30 billion per quarter to $38 billion. CASH MANAGEMENT BUYBACKS The Treasury is also increasing the size of cash management buybacks from a maximum $120 billion per year to $150 billion. For this quarter, however, it does not expect conducting cash management buybacks around the September tax date due to the ongoing rebuilding of the Treasury's cash balance. Cash management buybacks will resume in December, the Treasury said. Overall, the Treasury's financing plan will refund about $89.8 billion of privately-held Treasury notes and bonds maturing on August 15 and raise new cash of $35.2 billion from private investors. The Treasury also stressed the focus on T-bill issuance this quarter. It expects further marginal increases in T-bill auction sizes in coming days and then maintaining sizes at or near those levels through the end of September. It added that further increases in T-bill auction sizes are anticipated in October. "This guidance (on T-bill issuance) will continue to be the focal point of future refunding announcements," wrote Tom Simons, chief economist at Jefferies in a research note. "(Treasury) Secretary (Scott) Bessent has made it clear that he is carefully considering the best strategy and timing for terming out the debt versus continuing to lean on the front-end. At some point, perhaps after a few Fed (Federal Reserve) rate cuts, issuance of more coupons will be more attractive." Median forecasts from primary dealers estimated that Treasury could increase bill supply by $260 billion over a month and by $600 billion over a quarter without causing significant price deviations in bills relative to fair value, according to minutes of the meeting on Tuesday of the Treasury Borrowing Advisory Committee released on Wednesday. With respect to TIPS, Treasury plans to maintain the 30-year TIPS reopening auction size at $8 billion for August, increase the 10-year TIPS reopening auction size to $19 billion in September, and increase the October 5-year TIPS new issue auction size to $26 billion. Sign in to access your portfolio
Yahoo
24-07-2025
- Business
- Yahoo
US Treasuries Fall for Second Day as New Jobless Claims Fall
(Bloomberg) -- Treasuries slipped for a second day after new jobless claims fell for a sixth week, suggesting Federal Reserve policymakers will have to contend with a resilient US labor market. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom Can This Bridge Ease the Troubled US-Canadian Relationship? The selloff pushed Treasury yields on most tenors two to four basis points higher as of early afternoon in New York, with the benchmark 10-year's trading at 4.4%. Interest-rate swaps showed traders slightly pared bets on Fed rate cuts. They are now pricing in 42 basis points of reductions by the end of the year, with the first full cut coming by the October meeting. 'The bottom line is that the Fed can't credibly cut rates with an unemployment rate of 4.1%,' said George Catrambone, head of fixed income, DWS Americas. 'There is a glass ceiling on how high yields can push out of their current range with a Fed that's frozen in place.' Data released Thursday showed initial claims for unemployment benefits fell to 217,000 in the week ended July 19, the lowest since mid-April. The six weeks of declines is the longest such stretch since 2022. 'The labor market deterioration has slowed or stopped, with the caveat the labor supply, immigration, negative data revisions are making reading the labor market data tricky,' said Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment. Market expectations of rate cuts starting from late September, 'may be off the table if unemployment is unchanged next week,' he said. European government bonds also stumbled Thursday after the European Central Bank tempered expectations of a possible interest rate cut in September. Investors were already turning broadly more risk-on amid deals between the US and its trading partners. The European Union and the US are progressing toward an agreement that would set a 15% tariff for most imports, according to diplomats briefed on the negotiations. Another pressure point for traders is a dispute between President Donald Trump and Federal Reserve Chair Jerome Powell over construction works, which the president has criticized for cost overruns. Last week, Trump has said that he didn't plan to fire Powell before the end of his term. Trump was set for a tour later Thursday of the $2.5 billion renovation of the central bank's headquarters. 'The mounting risk of the Fed being seen as acting more on a political than a fundamental level is a sizable threat to long-end rates over the medium term,' Rabobank strategists wrote in a note. Earlier on Thursday, a $21 billion auction of 10-year Treasury Inflation-Protected Securities drew solid demand. --With assistance from Naomi Tajitsu. (Updates prices in second paragraph, adds strategist quote.) Burning Man Is Burning Through Cash Elon Musk's Empire Is Creaking Under the Strain of Elon Musk It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan A Rebel Army Is Building a Rare-Earth Empire on China's Border How Hims Became the King of Knockoff Weight-Loss Drugs ©2025 Bloomberg L.P.
Yahoo
15-07-2025
- Business
- Yahoo
Analysis-Investors seek protection from risk of Fed chief's ouster
By Carolina Mandl, Matt Tracy and Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -President Donald Trump's renewed calls for Federal Reserve Chair Jerome Powell's resignation have prompted investors to protect portfolios against the risk of higher inflation, as a central bank more willing to lower interest rates could fuel price rises and make lenders demand higher compensation to hold bonds. While a Fed chief more friendly to cutting rates could be mixed for equities in the short term, it would translate into a weaker U.S. dollar, increased volatility in the Treasuries market and higher longer-term rates, meaning more expensive borrowing costs for mortgages and corporate bonds. Since returning to the White House in January, Trump has repeatedly railed against the Powell-led Fed for not cutting interest rates. If market participants perceive that Fed independence is eroding, moves in financial assets could be wild, some analysts say. One of the top risks is that investors will sell Treasury bonds, lifting interest rates on longer-term maturities in the U.S. debt market relative to short-term securities. "If markets believe that a politically-captured Fed will lower rates to stimulate growth regardless of economic consequences, long-term inflation expectations will rise, causing the curve to steepen," said Guy LeBas, chief fixed income strategist at asset manager Janney Capital Management. "It's impossible to be confident in the magnitude of the move, but my guess is it'll be large - possibly measured in percent increases in 30-year Treasury yields, not basis points." The minutes from the Fed's June 17-18 meeting, which were released last week, showed little support for a cut at the central bank's July 29-30 meeting, as most policymakers remain concerned about the inflationary risks that Trump's import tariffs could pose. Even so, Trump has said Powell's resignation "would be a great thing." The president, who cannot fire the Fed chief over a monetary policy dispute, and his administration have publicly called for Powell's exit or for rates to be cut on multiple occasions this month. "While short-dated yields could fall in this scenario based on a faster pace of Fed rate cuts moving forward, longer-dated yields would likely recalibrate higher for stickier inflation and rising term premia based on the erosion of institutional trust," said Chip Hughey, managing director of fixed income at Truist Advisory Services. Bond investors are pricing in increased price pressures in the inflation market over the next few years. Breakeven inflation as indicated in the U.S. five-year Treasury Inflation-Protected Securities hit 2.476% late on Monday, a three-month high. In a recent escalation of criticism of Powell, the White House is probing cost overruns in the renovation of the Fed's historic headquarters in Washington. The questioning has intensified concerns among market participants over risks that the Trump administration will try to fire Powell for cause, perhaps the only legal path for it to do so. U.S. Treasury 30-year yields on Tuesday topped 5% for the first time since late May, as investors fretted about the country's huge fiscal deficit and assessed the risk of Powell's exit from the central bank. A Fed spokesperson pointed to Powell's previous statements. The Fed chief, who was appointed by Trump during the president's first term in the White House, has repeatedly said he has no plans to leave his post as head of the U.S. central bank before his term expires on May 15, 2026. Powell's seat on the Fed's Board of Governors extends to January 31, 2028. The White House did not immediately respond to a Reuters request for comment. "I still see the risks as fairly minimal, but higher than they were a week or two ago," said Matt Orton, head of market strategy at Raymond James Investment Management. Orton still favors a diversification away from Treasuries and into gold, as well as both high-quality value and growth equities. "The risk-reward for me in Treasuries right now just isn't there." ON THE HUNT While the odds of Powell being ousted or resigning are viewed as low, analysts see some chance that Trump could nominate someone for the job early to influence monetary policy through a "shadow" Fed chief. U.S. Treasury Secretary Scott Bessent said earlier this month the Trump administration is focusing now on finding a replacement for Powell this fall. Morgan Stanley said in a note that the risk of a shadow Fed chief is a less relevant question at this point. "Until Powell's term is up, though, the bigger risk to our Fed forecast is our economic forecast ... where we remain quite humble," Seth Carpenter, Morgan Stanley's chief global economist, wrote. Although market participants see the risk of weakening the central bank's independence as low, many investors are increasingly incorporating this prospect into their portfolios. JPMorgan CEO Jamie Dimon pointed to those risks in an earnings call on Tuesday, saying: "The independence of the Fed is absolutely critical, and not just for the current Fed chairman, who I respect, Jay Powell, but for the next Fed chairman." "Playing around with the Fed can often have adverse consequences, absolutely opposite of what you might be hoping for," Dimon added. George Bory, chief investment strategist for fixed income at Allspring, said the asset manager has been positioning for steeper yield curves, in line with an environment of future rate cuts and growing budget deficits. "That strategy of positioning for a steeper yield curve over the coming months and quarters seems to make a lot of sense. It's justified economically, the technicals support it, and then the political landscape also," he said. If stocks could get a boost from lower rates initially, the pressure from higher long-term rates would cast a shadow over them, investors say. Jack Ablin, chief investment officer at Cresset Capital, said U.S. equities would "probably be OK, but I think that it would likely continue to accelerate the trend of global investors moving capital away from the U.S." "Once investors question the independence of the Fed, it just becomes a less stable monetary environment," Ablin said. Sign in to access your portfolio
Yahoo
15-07-2025
- Business
- Yahoo
Analysis-Investors seek protection from risk of Fed chief's ouster
By Carolina Mandl, Matt Tracy and Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -President Donald Trump's renewed calls for Federal Reserve Chair Jerome Powell's resignation have prompted investors to protect portfolios against the risk of higher inflation, as a central bank more willing to lower interest rates could fuel price rises and make lenders demand higher compensation to hold bonds. While a Fed chief more friendly to cutting rates could be mixed for equities in the short term, it would translate into a weaker U.S. dollar, increased volatility in the Treasuries market and higher longer-term rates, meaning more expensive borrowing costs for mortgages and corporate bonds. Since returning to the White House in January, Trump has repeatedly railed against the Powell-led Fed for not cutting interest rates. If market participants perceive that Fed independence is eroding, moves in financial assets could be wild, some analysts say. One of the top risks is that investors will sell Treasury bonds, lifting interest rates on longer-term maturities in the U.S. debt market relative to short-term securities. "If markets believe that a politically-captured Fed will lower rates to stimulate growth regardless of economic consequences, long-term inflation expectations will rise, causing the curve to steepen," said Guy LeBas, chief fixed income strategist at asset manager Janney Capital Management. "It's impossible to be confident in the magnitude of the move, but my guess is it'll be large - possibly measured in percent increases in 30-year Treasury yields, not basis points." The minutes from the Fed's June 17-18 meeting, which were released last week, showed little support for a cut at the central bank's July 29-30 meeting, as most policymakers remain concerned about the inflationary risks that Trump's import tariffs could pose. Even so, Trump has said Powell's resignation "would be a great thing." The president, who cannot fire the Fed chief over a monetary policy dispute, and his administration have publicly called for Powell's exit or for rates to be cut on multiple occasions this month. "While short-dated yields could fall in this scenario based on a faster pace of Fed rate cuts moving forward, longer-dated yields would likely recalibrate higher for stickier inflation and rising term premia based on the erosion of institutional trust," said Chip Hughey, managing director of fixed income at Truist Advisory Services. Bond investors are pricing in increased price pressures in the inflation market over the next few years. Breakeven inflation as indicated in the U.S. five-year Treasury Inflation-Protected Securities hit 2.476% late on Monday, a three-month high. In a recent escalation of criticism of Powell, the White House is probing cost overruns in the renovation of the Fed's historic headquarters in Washington. The questioning has intensified concerns among market participants over risks that the Trump administration will try to fire Powell for cause, perhaps the only legal path for it to do so. U.S. Treasury 30-year yields on Tuesday topped 5% for the first time since late May, as investors fretted about the country's huge fiscal deficit and assessed the risk of Powell's exit from the central bank. A Fed spokesperson pointed to Powell's previous statements. The Fed chief, who was appointed by Trump during the president's first term in the White House, has repeatedly said he has no plans to leave his post as head of the U.S. central bank before his term expires on May 15, 2026. Powell's seat on the Fed's Board of Governors extends to January 31, 2028. The White House did not immediately respond to a Reuters request for comment. "I still see the risks as fairly minimal, but higher than they were a week or two ago," said Matt Orton, head of market strategy at Raymond James Investment Management. Orton still favors a diversification away from Treasuries and into gold, as well as both high-quality value and growth equities. "The risk-reward for me in Treasuries right now just isn't there." ON THE HUNT While the odds of Powell being ousted or resigning are viewed as low, analysts see some chance that Trump could nominate someone for the job early to influence monetary policy through a "shadow" Fed chief. U.S. Treasury Secretary Scott Bessent said earlier this month the Trump administration is focusing now on finding a replacement for Powell this fall. Morgan Stanley said in a note that the risk of a shadow Fed chief is a less relevant question at this point. "Until Powell's term is up, though, the bigger risk to our Fed forecast is our economic forecast ... where we remain quite humble," Seth Carpenter, Morgan Stanley's chief global economist, wrote. Although market participants see the risk of weakening the central bank's independence as low, many investors are increasingly incorporating this prospect into their portfolios. JPMorgan CEO Jamie Dimon pointed to those risks in an earnings call on Tuesday, saying: "The independence of the Fed is absolutely critical, and not just for the current Fed chairman, who I respect, Jay Powell, but for the next Fed chairman." "Playing around with the Fed can often have adverse consequences, absolutely opposite of what you might be hoping for," Dimon added. George Bory, chief investment strategist for fixed income at Allspring, said the asset manager has been positioning for steeper yield curves, in line with an environment of future rate cuts and growing budget deficits. "That strategy of positioning for a steeper yield curve over the coming months and quarters seems to make a lot of sense. It's justified economically, the technicals support it, and then the political landscape also," he said. If stocks could get a boost from lower rates initially, the pressure from higher long-term rates would cast a shadow over them, investors say. Jack Ablin, chief investment officer at Cresset Capital, said U.S. equities would "probably be OK, but I think that it would likely continue to accelerate the trend of global investors moving capital away from the U.S." "Once investors question the independence of the Fed, it just becomes a less stable monetary environment," Ablin said. Sign in to access your portfolio
USA Today
05-07-2025
- Business
- USA Today
How to protect your multi-decade retirement from inflation
If you're worried about inflation and how it might potentially wreck your retirement, you're not alone. In fact, a recent report from Gallup showed that as of April, inflation was the most named financial problem facing families — cited by 29% of respondents. That's down a lot from 41% in 2024, but it's still the top concern, ahead of housing costs and a lack of money. It's a worthy concern. Consider this: Prices have risen by about 288% since 1980, meaning that what cost you $1 in 1980 would cost you around $3.88 in 2025. If inflation stays around 3%, which is roughly its long-term average, it can cut the purchasing power of your portfolio in half within 25 years. Ouch! Here, then, are some ways to protect your retirement — which could last 20 or 30 years or more — from inflation. 1. Have an emergency fund First, be sure to have an emergency fund that can carry you through at least a few months of non-employment. Even if you remain employed, you might have a major unexpected expense rear its ugly head, such as a big car repair — and you don't want to remove any money from your retirement accounts, where those dollars are busy growing for you. 2. Aim high with your retirement goals Next, consider increasing the size of the nest egg you're aiming to build. Remember that if a million dollars seems sufficient now, if you're retiring in 20 years, a million dollars won't be what it used to be. For some people, $2 million might be a better goal. Take some time to figure out how much you might need to retire with in the future. That $2 million goal can be attainable if you sock money away aggressively and have enough years ahead of you. Source: Calculations by author. 3. Consider delaying retirement a bit One way to beef up your retirement nest egg is to delay retiring for a few years. Check out the table above. If you can get to $741,344 in 20 years, delaying retirement by five more years while continuing to save and invest might get you to nearly $1.2 million. This strategy also means a shorter retirement, which can help you not run out of money. 4. Include dividend payers in your portfolio Investing in dividend-paying stocks can be a powerful move. Healthy and growing dividend-paying companies tend to increase their payouts, often annually, and those increases can help you keep up with inflation. Their stock prices should appreciate over time as well. It's a win-win! You don't even have to become a stock market genius — as you can just opt for one or more dividend-focused exchange-traded funds (ETFs), which make dividend investing easy. 5. Consider I-bonds You might also consider investing in I-bonds, which feature inflation-linked interest rates. Treasury Inflation-Protected Securities, or "TIPS," are another possibility, as they feature inflation adjustments. These are not likely to be big growers, but they can protect the purchasing power of the income you get. 6. Consider REITs If you're seeking income from your portfolio, which is a smart move for retirees, you might want to look for real estate investment trusts (REITs) — companies that own lots of properties and earn income by renting them out — because they're required to pay out most of their income in dividends. Owning a REIT-focused ETF can be a good move, too. Perhaps check out the Vanguard Real Estate ETF or the JPMorgan Realty Income ETF. 7. Favor stocks whose companies can raise prices If you're investing in individual stocks, give some thoughts to the companies behind the stocks. Consider favoring those that can get away with raising prices, as that can help them and their shareholders keep up with inflation. Industries that often engage in price wars will not fit this bill, but companies with strong brands are often able to hike prices successfully, because people want those brands. 8. Keep some money in 'safer' investments when interest rates are high When you're retired, you can still keep a meaningful portion of your portfolio in stocks, as much of your money will still have many years in which to grow. But it's also smart to keep several years' worth of living expenses in "safer" and less volatile places, such as certificates of deposit (CDs), high-yield savings accounts and money market accounts. This is especially true right now, when interest rates are still relatively high and you might find rates of 4% or more, which will often outpace inflation. 9. Consider maximizing your Social Security benefits One of Social Security's best features is that it includes nearly annual cost-of-living adjustments (COLAs). To maximize those increases, you might try to maximize your benefits. An increase of, say, 4% will be higher on a $2,500 monthly benefit than a $2,000 one. Be sure to think through the issue of when to claim your benefits, because the best age at which to collect is different for different people. (It's age 70 for most folks, though.) 10. Have multiple income streams in retirement Finally, aim to have multiple retirement income streams, so if one is particularly affected by inflation, you may rely more on another. These streams may include Social Security, dividend income, annuity income, rental income and other potential incomes. However you do it, do have a retirement plan in place, and do prepare for the effect of inflation over time. Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Real Estate ETF. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $23,760 Social Security bonus most retirees completely overlook Offer from the Motley Fool: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets"could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
