This year, a series of geopolitical shocks have hit business sentiment in an already aged expansion. However, these shocks have been tempered by an almost universal adoption of easier monetary and fiscal policies.
On the US-China trade front, tensions have ratcheted up during the past few months. And in politics, turmoil persists in the US and UK.
A stall in global profit growth, due to margin compression over the past year, has amplified the downside risks. Keeping dry powder could be a solution for uneasy times.
Against this backdrop, investors should stay nimble in liquid instruments. While euro short bonds and bills are very negative, the US market enjoys both positive and higher yields.
Outside of the repo market travails, the 1–3 month T-Bills appear to be a viable option for USD portfolios and those investors who view the dollar as well anchored at its current level for the medium term.
For investors looking for a slightly longer duration, the 1–3 year US Treasury part of the curve also offers a relatively attractive yield.