At $2 mn/min, US Treasuries mint cash like never before

For the first time in nearly a generation, fixed income is living up to its name.

-  MICHAEL MACKENZIE

This, at a certain level, is simply the consequence of benchmark rates in the US jumping from 0 per cent to over 5 per cent in a span two years.

But at a time when all of Wall Street seems fixated on whether the Federal Reserve will cut interest rates this year, it's easy to lose sight of one important fact: That after being held hostage by zero-rate policies for almost two decades, US Treasuries are finally reverting back to their traditional role in the economy.

That is, as a source of income that investors can lock in and rely on. The numbers tell the story. Last year, investors pocketed nearly $900 billion in annual interest from US government debt, double the average over the previous decade. That's set to rise as over 90 per cent of Treasuries carry coupons of 4 per cent or more.