For the first time in more than two decades, some of the world’s most risk-free securities are delivering bigger payouts than a 60/40 portfolio of stocks and bonds.
The shift underscores how much the Federal Reserve’s most aggressive monetary tightening since the 1980s has upended the investing world by steadily driving up the “risk-free” interest rates — such as those on short-term Treasuries — that are used as a baseline in world financial markets. “After a 15-year period often defined by the intense cost of holding cash and not participating in markets, hawkish policy is rewarding caution,” Morgan Stanley strategists led by Andrew Sheets said in a note to clients.