Tom Carper Sells Ultrashort Bonds and Buys Treasuries

Tom Carper, a Democrat Senator from Delaware, recently disclosed many trades but there were two larger ones that are worth mentioning. He sold $15,000-$50,000 worth of Lord Abbett Ultra Short Bond Fund Class I (LUBYX:US) shares on February 15, 2023, at a closing price of $9.87 per share, and he also bought $15,000 - $50,000 US Treasury Bills.

What does this mean? These are portraying trades of someone who thinks the short end of the yield curve is overvalued, selling an ultra-short bond fund, and then moving to the longer maturity side of the trade by buying up Treasury bills. Either the Senator thinks inflation has run its course and is on its way down, and the Federal Reserve isn’t going to hike rates as much as expected, or he might be getting on the wrong side of the trade. Regardless, with Treasury rates much higher than in recent history, maybe he is just locking in some of those nice coupon rates for his portfolio.

The yield on 10-year US Treasury notes reached 4% on Wednesday as traders sold government debt in anticipation of a longer period of higher interest rates. The increase marked the highest point since November and follows rising yields last year trading at levels previously reached more than a decade ago.

The return on the two-year note also rose, reaching 4.88%. The so-called yield curve is in its steepest inversion in 42 years, often viewed as a significant recession indicator. Markets have been driven by the interest rate outlook as the US Federal Reserve has raised borrowing costs to fight inflation.

Tom Carper is an American politician who has served as the senior United States Senator from Delaware since 2001. He was born in Beckley, West Virginia in 1947 and later attended Ohio State University and the University of Delaware. Carper began his political career as a member of the Delaware House of Representatives, later serving as the state's Treasurer and Governor before being elected to the United States Senate. Throughout his career, Carper has focused on issues such as environmental protection, healthcare reform, and fiscal responsibility. He has been a vocal advocate for clean energy and has worked to promote greater investment in renewable energy sources.