Individual Investors Opt for Treasury Securities as Stocks Stumble

stocks have hit the skids this year, with the S&P 500 dropping 14% year to date, thanks to roaring inflation, soaring bond yields and the war in Ukraine.

But the jump in yields has drawn individual investors to Treasury bonds. Treasury yields have hit their highest levels since 2018

The 10-year yield this year has jumped 1.39 percentage points to 2.9%. It reached a peak of 3.17% on May 9.

So investors are jumping in to take advantage of the higher interest payments

During the four-week period ended May 25, investors sent a net $20 billion into mutual and exchange-traded funds that concentrate on ordinary Treasurys.

That represents the largest four-week commitment in the 29 years of Refinitiv Lipper data. The funds have seen net inflow of $52 billion so far this year.

The advantage of individual Treasures is that if you hold them until they mature, you’re almost guaranteed to receive the par value of your bond.

This strategy means that if yields go up, your new bonds will let you take advantage of that. And if yields slide, your older bonds will enable you to enjoy the higher rates from before.

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