Fed rate cuts – treasuries
Now that the Fed has started its rate cutting cycle, is it still prudent to save with U.S. treasuries ?
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Yes. I consider saving as putting aside money for another day. As long as purchasing power remains the same.
The rule of thumb to determine this is :
if interest rates are higher than inflation rate, treasuries are maintaining its purchasing power.
I compare Fed funds rate ( 3 month rate ) currently 4.75% to inflation rate — core inflation is currently 3.2% . Rates are higher by 1.55%. Data for inflation can be found on bls.gov .
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I am continuing to put excess savings ( wages – expenses ) into short dated treasuries. Preferably, 3 months to maturity.
When treasuries redeem, I recycle those back into more t-bills.