By: Dr K C Gupta, YBB Personal Finance

Mini Feature ULTRA-SHORT-TERM BOND FUNDS

CONTRARIAN INDICATORS

AAII Bull-Bear Spread -11.1% (below average)
CNN Fear & Greed Index 68 (greed)
NYSE %Above 50-dMA 67.11% (positive)
SP500 %Above 50-dMA 61.00% (positive)

ICI Fund Allocations (Cumulative), 2/28/26
OEFs & ETFs: Stocks 61.70%, Hybrids 4.02%, Bonds 17.45%, M-Mkt 16.43%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 4/29/26+ hold
FOMC 6/17/26+ hold

Treasury

T-Bills 3-mo yield 3.70%, 1-yr 3.64%; T-Notes 2-yr 3.71%, 5-yr 3.84%, 10-yr 4.26%; T-Bonds 30-yr 4.88%;
TIPS/Real yields 5-yr 1.28%, 10-yr 1.90%, 30-yr 2.65%
FRNs Index 3.653%

Bank Rates www.depositaccounts.com/



Stable-Value (SV) Rates, 4/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.00%, RA 4.75%
Flexible RCP 4.25%, SRA 4.00%, IRA-101110+ 3.45%
TSP G Fund 4.375% (previous 4.000%)

India Fear & Greed MMI 66.35 (greed)
Weekly ETFs: INDA +3.93%, INDY +2.97%, EPI +4.45%, INDH +3.15%, SPY +4.52% 

The data above are as of Sunday preceding the publication date.

ENERGY

German RENEWABLE ENERGY Enerparc is setting up Enerparc Power Trading in India to supplement its power generation operations via Enerparc-India. Power trading involves trading & distribution of power among power generators & power users.

Nayara-SAP lawsuit is ongoing. The issue is whether German parent SAP can impose European sanctions through its SAP-India subsidiary. The SAP software was purchased & customized for Nayara over 18 years & SAP-India provides essential services & support (including updates). SAP-India says YES, citing its dependence on German SAP, but Nayara says NO. There is a court precedent on how Nayara-Microsoft dispute was resolved.

TRANSPORTATION

Wabtec-India, a subsidiary of US Wabtec/WAB (Westinghouse Airbrake Technologies), has a large order to supply 680+ overhead pantograph systems for electric trains (commuter & long-distance) that will be manufactured in its facility at Hosur, TN, India. These pantograph systems have been manufactured in India since 2023. (Not to be confused with similarly named Webtec)

US KKR (private-equity/credit) & Indian PMI Electro Mobility (EV bus manufacturer; including its EV bus operations subsidiary Allfleet) have a financing deal for EV busses (e-busses) for several Indian states.

SPECIAL TOPICS – ULTRA-SHORT-TERM BOND FUNDS

Ultra-ST bond funds are next to money-market funds in safety. While they don’t maintain $1 NAV, their volatility is very low. Because their ERs are lower than those of the money-market funds, they compete well in yield.

There is also some confusion about the ultra-ST bond funds that performing poorly during the GFC, 2008-09. That did happen, but the ultra-ST bond funds of today are quite unlike those that existed before/during the GFC. Then, the ultra-ST bonds funds loaded up on HY debt to boost yields & articulated that not much could go wrong for short maturities of under 1 yr. But plenty went wrong during the GFC & many HY bonds they held couldn’t be rolled over & defaulted. This rollover risk is very high for ST-HY & that’s still so.

The old ultra-ST fund category disappeared for a few years after the GFC after such funds from Fidelity, Schwab, etc had big & uncharacteristic losses. There were investor lawsuits & fines by the SEC for improper ads/ disclosures. All of these old ultra-ST bond funds were dissolved or renamed or merged into another bond category. Post-GFC reforms may have also overregulated the money-market funds, so there were some consolidations but their ER remain stubbornly high.

A new ultra-ST category & funds evolved a few years after GFC that use primarily invest-grade bonds with ST maturities. None of them is a continuation of the old ultra-ST bond fund. Confusion arises because the same name was used for the category, but the new requirements were very different.

Morningstar definition now says that (new) “Ultrashort bond portfolios invest primarily in investment-grade US fixed-income issues & have durations typically of less than 1.0 year. This category can include corporate or government ultrashort-bond portfolios, but it excludes international, convertible, multisector, and high-yield-bond portfolios…”. You can check the holdings of the ultra-ST fund you are holding at fund websites or at Morningstar, etc.

There are several ultra-ST bond ETFs: SGOV, BIL, JPST, PULS, ICSH, etc. Watch their durations because there can be significant variations within the range of 0-1 year. Some ETFs such as USFR & TFLO use FRNs (Treasury Floating-Rate Notes) that have 2-year maturity on issue but their rates reset weekly to 3-month T-Bills; so, their effective durations are very short & they provide yields slightly better than money-market funds due to their lower ERs.

ETFs with high % of income derived from government sources may have that portion exempt from state & local taxes.

For more information, see https://ybbpersonalfinance.proboards.com/