Goldman Sachs Reveals the Preferred Trade for Big Investors in Volatile Markets

Investors, including institutions and wealthy investors, are flocking to short-term U.S. government bonds, particularly 1-year Treasury bills, as a way to navigate the recent surge in long-term interest rates. This trade allows investors to collect a higher yield in the front end of the yield curve, taking advantage of the expectation that interest rates will remain elevated for a longer period. While longer-duration Treasuries have experienced a sell-off, other fixed income instruments have not fully adjusted, creating potential opportunities in the future. Professional managers are also reducing the average duration of their portfolios by investing in 1-year T-bills.