By Henry Adams on 2020-03-09
Monday Meltdown. This week we are looking to keep our message brief. The primary concern in the market is no longer return on capital, rather the return OF capital. TreasurySpring FTFs offer direct access to the lowest-risk store of value in the market through its sovereign and bank secured FTFs.
We are on track for the worst day in stock markets since the 2008/09 financial crisis.
Within four minutes of the S&P 500 et al. opening in the US, trading was suspended following indices there falling 7%.
Stock markets are being sold off heavily in across the globe today, following record moves lower in oil (at one point a staggering 31% down, and now still almost 50% lower from the beginning of the year), the Australian Stock Exchange (ASX 200) closed 7.33% lower and right now Italy and Greece are teetering around 12% down on the day.
These moves are frightening, some of which surpass the sort of swings I witnessed in 2008-09. The return on 10 year US treasuries printed a record low at 0.462%.
In GBP both the 2 year & 7 year Government bonds slipped into negative territory for a period, a first for UK debt. As of right now we are still able to offer UK Treasury Bills FTFs and our Bank Secured (collateralised by government paper over and above the value of cash lent) with very fair yields particularly given the current environment and the considerably enhanced security these products offer over and above unsecured stores of cash.
Once again on Friday the Federal Reserve had to inject further cash into markets over and above the limits set a complete reversal of their “wind-down” (of liquidity) mode.
US bills continue to be the target store of money with cash fleeing stocks and managed funds to access the risk-free rate.
1 year US Bills are currently still in positive territory but being this close to zero the possibility of negative yields is here too.
Time to get serious about access to the safest havens for cash balances.
Articles of interest
US trading halted as shares plunge around the world
Historic Day in Markets Has Traders Rethinking What’s Possible
An FTF or Fixed-Term Fund is a regulated fund investment that offers exposure to a single investment-grade obligor for a fixed term, without the need for any client infrastructure. An FTF has many of the same characteristics as a term deposit, but can offer exposures outside of the banking sector. TreasurySpring is originating FTFs with sovereign, financial and corporate obligors.