Market Watch Commentary Bad Advice?
I was reading "The Ultimate Sell Signal: Part II" and a single line got my attention for the disasterous advice it implies.
The FDIC's challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.
The very last part, "maybe short-term Treasury bills," when you've been advised "treasury-only money-markets" implies that if you are in treasuries, they should be long term.
I was messing around with 30 year treasury bill calculations to calculate what the value would be if the market rate went from the 4.375% to say 5%. It would change the trading value of the treasury bill to $90.34 per $100 face value. And for a second comparison, if the rate went to 6% the price would go to $83.27. Long term treasury bills are bubbled due to the interest rate being artificially low.
I don't see any reason why treasury bills couldn't do the same cliff diving we've seen all over the place.