Federal Reserve Board of Governors Christopher Waller favors another 0.75% increase in interest rates at the central bank’s July meeting to continue to aggressively fight inflation, said reported the Wall Street Journal.
After the July meeting, the Fed is not expected to meet again until September. Waller said a 0.50% rate increase at that meeting would also likely be needed. According to the Fed governor, November would be the first time that the central bank could possibly return to traditional hikes of 0.25%, depending on inflation levels.
“Inflation is just too high and doesn’t seem to be coming down,” Waller said in a webinar today. “We need to move to a much more restrictive framework in terms of interest rates and policy, and we need to do that as soon as possible.”
Many advisors and investors find themselves trying to predict Fed interest rate hikes to align their portfolios, but the WisdomTree Floating Rate Cash Fund (USFR) can take the guesswork out of hedging portfolios against rising interest rates.
The fund capitalizes on the use of floating rate notes by the US Treasury and can be an excellent option for investors looking to limit their level of credit risk while capturing higher return potentials in declining rate environments. rise.
WisdomTree believes that floating rate debt is an important bridge between long-term, fixed-rate treasury bonds and short-term treasury bills. By investing in floating rate treasury bills, holders are paid quarterly and the amount paid is based on a rate that resets daily with reference to a weekly rate. This can be a good option if treasury bond yields rise, as it offers the possibility of better compensation compared to a fixed rate bond.
Another advantage of a variable rate is that price volatility can be somewhat mitigated by weekly resets compared to fixed income bonds. Floating rate treasury bills are a good option when the yield curve is flat or inverted.
USFR seeks to track the Bloomberg US Treasury Floating Rate Bond Index, which measures the performance of US Treasury Floating Rate Bonds and contains floating rate bonds with two-year maturities and a minimum outstanding amount of $1 billion. dollars. The index uses a rules-based strategy and is weighted by market capitalization. The index excludes fixed rate securities, Treasury inflation-protected securities, convertible bonds and bonds with survivor put options.
USFR has an expense ratio of 0.15%.
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