I hope everyone has been able to put a little money on the side.
Here’s an interesting chart gauging FED activities :
By clicking probabilites on this tool, we can see the probabilites of what the markets believe the eventual fed funds rate. Currently, there’s an 75% probabilty that the FED will keep rates steady at 4.25 – 4.5% in July’s meeting. However, there’s a 70% chance that the FED will cut rates by .25 in September.
If FED cuts rates by .25, then 3 month t-bills will go down to about 4%. As 3 month rates track fed funds.
I’ll roll 3 to 6 month t-bills into 1 year t-bills as they redeem. I would do this as long as 1 year t-bills yield more than 4%.
Why go out to one year ?
On the probabilty chart, there’s a 60% chance the FED will cut again in October by another .25. Then, the one year purchased around 4% will be yielding more than the 3 month rate.