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With the Fed funds rate at 5.5%, its highest level since the early 2000s, the temptation of cash-like investments has never been more appealing, pushing investors to reconsider riskier assets such as stocks.
While the Fed may opt to press the hold button this month, the end of rate hikes has not been yet declared. Indeed, the possibility that interest rates could remain high for far longer than many predicted only a few months ago appears to be becoming more realistic.
The resilience of the U.S. economy in recent times has left many economists and analysts scratching their heads, prompting them to adjust their growth projections.
This, in turn, has made the prospect of a looming recession seem even more remote. Consequently, we’ve witnessed a spike in U.S. Treasury yields, with the 2-year yield recently breaking the 5% barrier once more.
Read Also: Fed Scrambles To Revise 2023 Projections As US Economy Surges Beyond Expectations
Chart: 2-Year Treasury Yield & Fed Funds Rate
The allure of cash-like investment options, now offering high returns, has gripped the attention of investors.
August saw an astonishing $7 billion flow into ultra-short bond ETFs, marking a stark turnaround from the capital flight observed in the preceding four months.
And as we step into the first week of September, the trend of cash-like ETFs attracting substantial investments remains steadfast.
Here are five short-term Bond ETFs that not only allow you to capture returns but also act as a protective shield against potential downturns in the stock market.
Now Read: Why Is The US Dollar On Fire Despite Fed’s Steady Interest Rate Signals?