Improving Cash Yields: Direct Treasuries Trading

Improving Cash Yields

After a long dormant rest, cash has reclaimed its supremacy following the most aggressive tightening campaign in the last four decades by the Federal Reserve Bank (Fed).

May 2023

In this paper, we investigate the benefits of diversifying from a traditional bank deposit base and examine ways in which Treasury securities can add both yield and safety to cash management programs. Additionally, we discuss how our Portfolio Solutions can help construct and implement US Treasury strategies.

We have observed the hike in interest rates by 500 basis points (bps) within a year’s time, and according to its latest projections, the Fed may not be done yet. Inflation has been at the center of these actions, and the most recent Consumer Price Index (CPI) data continues to support the need for additional tightening. While recent volatility in the banking sector calls into question the Fed’s ability to raise rates meaningfully, the Fed is signaling that yields may need to remain high for a longer period. The current turmoil within the regional banking sector also highlights the benefits of a diversified cash management strategy.


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