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Floating-rate Treasury paper coming to market as yields sink

  • The Treasury sets January 29 for its first sale of floating-rate paper - $15B in 2-year notes. It's the first new security offering by the government since the introduction of TIPS in 1997.
  • The move comes as investors were reintroduced to the risk of rising interest rates for the first time in a while last year. Floating-rate investments saw plenty of interest, but options are mostly limited to riskier investments like bank loans (also called leveraged or senior loans; ETFs for these products saw plenty of inflows in 2013).
  • For now, the Treasury offering will be a niche product, and BAML says the biggest interest will likely come from money-market funds.
  • Amid the excitement for floating-rate debt, Treasury yields continue to dive in 2014, the 10-year off another five basis points today to 2.73%.
  • Treasury ETFs: TBT, TLT, TMV, SHY, IEF, TBF, PST, EDV, TTT, TMF, SBND, ZROZ, TLH, IEI, DLBS, TYO, DTYS, VGLT, BIL, UST, SHV, TBX, UBT, TLO, VGIT, VGSH, GSY, SCHO, LBND, DTYL, SCHR, TYD, ITE, TENZ, TYBS, DTUL, TUZ, SST, FIVZ, DTUS, TBZ, DFVL, DLBL, DFVS, TYNS
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Comments (1)
  • Heratio Alger Jr.
    , contributor
    Comments (35) | Send Message
     
    Sounds interesting, but the devil is in the details.
    24 Jan, 03:25 PM Reply Like
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