Latest news with #federalBudget
Yahoo
03-07-2025
- Business
- Yahoo
Fixed Income ETF Assets Hit Record $2T
What do fixed income ETFs have in common with the Department of Government Efficiency? The answer, given away by the headline above, is $2 trillion. Not only is that the amount the Elon Musk-convened group (hoped to) cut from the federal budget, but it's also the size of the US fixed income exchange-traded fund market. On a fun note, 2 trillion is also the most recent estimate of the number of galaxies in the observable universe. The US fixed income ETF business reached that milestone in June, following a flood of assets into products this year. '$2 trillion is pretty noteworthy,' said Matthew Bartolini, head of Americas ETF research at State Street Investment Management. 'It's not being fueled by one single factor — there are multiple drivers.' READ ALSO: Are Gambling ETFs Worth the Bet? and Crypto ETFs Are Diversifying. Can Demand Keep Up? With $186 billion flowing into fixed income ETFs in the first half of 2025, the products got 34% of the total ETF sales, Bartolini noted. 'That is double what their market share would indicate.' Fixed income ETFs also saw record sales in June, taking in $18 billion, with only one subcategory, long-term government bond ETFs, seeing net outflows, he said. The most obvious factor in recent demand for fixed income ETFs is yield, said Daniel Sotiroff, senior analyst on the passive strategies team at Morningstar. Compared with the yields in the 2010s, when interest rates were near zero, the 4% or 5% yields today are a big improvement, he noted. 'The yield on my savings account is pretty dismal,' he added. 'That makes even something like a Treasury bill ETF more attractive.' Other contributors to growth overall are advisors outsourcing investment decisions via model portfolios and asset-allocation products, as well as an increased appetite for income, he said. 'We used to talk about dividend ETFs six or seven years ago … but increasingly, that conversation is going toward fixed income funds.' According to Morningstar Direct data, these are the fastest-growing fixed income ETFs this year through May: By net sales, the iShares 0-3 Month Treasury Bond ETF led the way, taking in $17 billion, followed by the SPDR Bloomberg 1-3 Month Treasury Bill ETF, at $7 billion, and Schwab Mortgage-Backed Securities ETF, at $5 billion. But by organic growth, or net flows as a proportion of total assets, the biggest seller was the Schwab Mortgage-Backed Securities ETF, at over 10,000% growth, followed by the T. Rowe Price QM US Bond ETF, at 1,200%, and JPMorgan BetaBuilders US Treasury Bond 1-3 Year ETF, at 930%. Actively Recruiting: Active management is also behind much of the recent demand and product development. Almost all of Vanguard's fund launches over the past couple of years have been fixed income ETFs, many of which are active, Sotiroff noted. That firm filed this week for the Vanguard High Yield Fixed Income ETF, following recent launches in that category by Capital Group and JPMorgan. Unlike with equities, fixed income has been an area where a significant number of shops have been able to outperform, Sotiroff said. 'It is an area where active managers can actually add some value,' he added. This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter.
Yahoo
20-06-2025
- Business
- Yahoo
Nearly one-third of $36T national debt needs refinancing as Trump demands rate cuts
The Treasury Department will need to refinance nearly one-third of the more than $36 trillion in debt owed by the federal government, which serves as a backdrop to President Donald Trump's repeated calls for the Federal Reserve to cut interest rates. A report by the Treasury's Office of Debt Management for the second quarter of fiscal year 2025 shows that as of April 30, 31.4% of the outstanding national debt will be due for refinancing within the next year. That amounts to about $11 trillion in U.S. debt securities that will have to be refinanced over the course of the next 12 months. The cost of servicing the more than $36 trillion national debt has escalated in recent years as interest rates rose to counter the most significant inflationary cycle the U.S. economy has faced in four decades. Trump Slams 'Stupid' Fed Chair Jerome Powell Ahead Of Interest Rate Decision In fiscal year 2024, interest costs incurred through servicing the national debt jumped by $239 billion, or 34%, to a total of $949 billion. That amount is larger than both the Department of Defense's discretionary budget and federal spending on Medicare. Read On The Fox Business App The rising cost of servicing the national debt, along with spending growth in Social Security and Medicare due to the aging of America's population, are the main drivers of the widening federal budget deficit – which is projected to total about $1.9 trillion in fiscal year 2025. Trump has repeatedly called for the Federal Reserve to cut its benchmark interest rates in an effort to stimulate economic growth and save the federal government money on servicing the debt. Federal Reserve Leaves Key Interest Rate Unchanged For Fourth Straight Meeting Trump has also attacked Fed Chair Jerome Powell, who he nominated to the role in 2017, as being "Mr. Too Late" and a "numbskull" for the central bank not cutting interest rates. The Fed on Wednesday left its benchmark federal funds rate unchanged for the fourth consecutive meeting, which prompted the president to renew his attacks on Powell. "'Too Late' Jerome Powell is costing our Country Hundreds of Billions of Dollars," Trump wrote on Truth Social. "He is truly one of the dumbest, and most destructive, people in Government, and the Fed Board is complicit. Europe has had 10 cuts, we have had none. We should be 2.5 Points lower, and save $BILLIONS on all of Biden's Short Term Debt. We have LOW inflation! TOO LATE's an American Disgrace!" Will Pressure From Trump And Vance Spur Powell To Cut Interest Rates? While the Federal Reserve's benchmark rate can influence other market-based interest rates – like those on Treasuries, mortgages, credit cards and more – rate cuts by the Fed can only add pressure for those rates to move in tandem and don't necessarily mean that those rates will move. The Fed cut interest rates three times at the end of last year, including a 50-basis-point cut in September followed by a pair of 25-basis-point rate cuts in November and December. Powell and the Federal Open Market Committee, which sets monetary policy at the central bank, reiterated their position that the current level of interest rates is appropriate amid economic uncertainty. Policymakers added they will continue to monitor inflation and labor market data for signs that an adjustment to interest rates may be article source: Nearly one-third of $36T national debt needs refinancing as Trump demands rate cuts Sign in to access your portfolio
Daily Mail
18-05-2025
- Business
- Daily Mail
Major change to superannuation coming into force within days: What Australians need to know
If you have a job in Australia, you've probably noticed each of your payslips has a section telling you how much superannuation will be paid alongside your wages. But while your wages are deposited in your bank account however frequently you receive a payslip – whether that's weekly, fortnightly or monthly – it's a different story for your super. Under current superannuation laws, employers are only required to pay super into an employee's nominated fund at least four times a year – 28 days after the end of each quarter – although many do pay more regularly. But that's set to change. From July 1 2026, new 'payday super' rules will require employers to pay super into the employee's fund within seven days of wages. This reform was announced in the 2023–24 federal budget, allowing employers, superannuation funds and software providers three years to set up compliant systems. But it hasn't yet been legislated. Now, some industry groups are calling for a further delay of up to two years. So, who are these reforms designed to benefit? And does business really need more time to get ready? Missing or incorrect super Missing or incorrect super payments present a huge problem for Australia's retirement system. The Super Members Council claims one in four Australians are missing out on the correct amount of superannuation contributions. The Australian Taxation Office (ATO) estimates A$5.2 billion of guaranteed superannuation went unpaid in 2021–22. This can be due to payroll errors, misclassification under an award or, in extreme cases, non-payment of superannuation as a form of wage theft. All these things can be harder to spot when super is paid less frequently. Rules only requiring super to be paid quarterly may have been appropriate 30 years ago, in the early days of the superannuation guarantee. Business systems were often not computerised, and wages were often paid in cash. Times have changed Payroll systems are now much more sophisticated. From 2018, the federal government rolled out the single-touch payroll program that requires employers to report wages in real time, including details of superannuation guarantee withheld from an employee's wages. The government is already benefiting from the increased automation of data submitted through this system. Single-touch payroll data helps improve official labour statistics and provides up-to-date income information for employees through the MyGov portal. Sending real-time data to Centrelink addresses one of the major flaws underpinning the Robodebt scandal, which used an averaging system to estimate fortnightly earnings. Benefits for employees In simple terms, the coming changes are basically a change in timing. Payments will be transferred to an employee's super fund in the same way their wages are transferred directly to their bank account. Once bedded down, the changes will provide benefits across the board to employees, employers and the government. Currently, if an employee believes the correct amount of superannuation is not being paid to their fund, they are expected to follow this up directly with the ATO. Unfortunately, many employees presume the withheld amount shown on the payslip has already been paid into their super account. Unless a member is actively monitoring their super balance, they may be unaware that the amount shown on their payslip is not being paid into their fund on a timely basis. Benefits for business Employers should also benefit from these changes, many of whom already do transfer superannuation when wages are paid. Currently, superannuation guarantee payments are run on a separate payment cycle to payroll, coinciding with payment of tax liabilities. If payments are on the same cycle as payroll, it should make budgeting easier, and ensure the separate super payment run is not overlooked. This assumes, of course, that the business is not relying on unpaid superannuation contributions to manage their cash flows elsewhere in the business. If that is the case, payday super changes will help protect the employee if the employer runs into financial difficulties. The change will also allow the tax office to match deductions and payments in real time to detect fraud – and check that super is actually being paid. This can reduce audit costs and – in the long run – reduce reliance on the aged pension as super account balances improve. Why wait any longer? So, with all of these expected benefits, why has the financial services sector this month asked for implementation to be delayed further – by up to two years? The building blocks of the system – electronic payments to transfer funds and the government's single-touch payroll gateway – are already in place. One challenge is legislative. Although announced in May 2023, the draft legislation was only released for consultation in March 2025. The Superannuation Guarantee (Administration) Act 1992 needs extensive amendments to rewrite references to the calculation and payment of the superannuation guarantee charge. The draft legislation also makes some changes to definitions that may impact on how systems must be set up for payday super. Although not intended to change entitlements, they need to be made accurate in the software. Still, payday super has the potential to strengthen Australia's superannuation system, protecting employee contributions and smoothing the payment system for employers. Concerns around its implementation are largely due to the time it has taken for the draft legislation to emerge. Following the election, the federal government has the numbers to pass this legislation as a matter of priority.
