Market Optimism Drives Fidelity Manager To Sell Off Treasuries: 'We Don't Expect Sort Of A Recession Anymore'

BY Benzinga | TREASURY | 02/23/24 11:01 AM EST

Investors looking for alternate investments to stocks during the period of high inflation and recession worries were turning to 10-year and 30-year treasuries.

A money manager has liquidated treasury holdings, driven by a fresh wave of optimism about economic growth.

What Happened: Investors and market experts see the potential for rate cuts by the Fed in 2024 following a phase of increased rates.

George Efstathopoulos, who is a Fidelity International money manager, sold the majority of U.S. Treasuries in December from funds he oversees at the financial company, Bloomberg reports.

The sale comes as the money manager forecasts growth in the U.S. economy and diminishing concerns over a potential recession.

"We don't expect sort of a recession anymore," Efstathopoulos said. "The probability of no landing is still small, but it's been increasing."

The money manager said that talks of no landing increasing could lead to lowered expectations for Fed cuts in 2024.

Efstathopoulos manages around $3 billion of income and growth strategies for the large financial institution, according to the report.

Related Link: Treasury Glut: Can Investor Demand For US Bonds Keep Pace With Supply Increases?

What's Next: After selling off the treasuries in December, Efstathopoulos has turned his attention to other assets that he said can outperform in good economic times.

Among the investments that are attractive to the money manager are U.S. mid-cap stocks and Greek stocks. The money manager also likes Japanese banks, according to the report.

Read Next: Japan’s Nikkei Bucks Recession Trend, Hits Historic 39K Points, Echoing 1989 Levels

Photo: Shutterstock

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.