SGOV: The Labor Market May Weaken In 2025 While Inflation Rebounds

Harrison Schwartz

SGOV is only a good investment if we can safely assume its yield will be above the inflation rate, which has been the case since 2022.
The market is bracing for a total 50-75 bps rate cut over the next year, which seems likely given low and falling hiring rates, pointing toward a sustained unemployment increase.
Geopolitical risks and potential tariffs could increase inflation, particularly in goods, while service inflation remains elevated due to shortages in skilled jobs.
Given historical precedence and the last jumbo rate cut, I expect significant inflationary monetary and fiscal stimulus in response to a further increase in unemployment.
Investors may be best shifting toward inflation-indexed bonds like VTIP, which should outperform inflation, while SGOV appears likely to underperform it in 2025-2026.

Richard Drury

My most prominent portfolio position has been short-term government debt for the better part of two years. Although short-term Treasury bills like the ones held in the iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV) have not had the same

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

4

{"i18n":{"language":"en_US"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":375541508112536,"tweetId":"375541508112536","gmtCreate":1732218455000,"gmtModify":1732707600580,"author":{"id":10000000000010872,"idStr":"10000000000010873","authorId":10000000000010872,"authorIdStr":"10000000000010873","name":"Harrison Schwartz","avatar":"https://community-static.tradeup.com/news/3caa8e02189196b324406870bb2d3718","vip":8,"userType":8,"introduction":",","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":7,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"title":"SGOV: The Labor Market May Weaken In 2025 While Inflation Rebounds","html":"<html><head></head><body><ul>\n <li>SGOV is only a good investment if we can safely assume its yield will be above the inflation rate, which has been the case since 2022.</li>\n <li>The market is bracing for a total 50-75 bps rate cut over the next year, which seems likely given low and falling hiring rates, pointing toward a sustained unemployment increase.</li>\n <li>Geopolitical risks and potential tariffs could increase inflation, particularly in goods, while service inflation remains elevated due to shortages in skilled jobs.</li>\n <li>Given historical precedence and the last jumbo rate cut, I expect significant inflationary monetary and fiscal stimulus in response to a further increase in unemployment.</li>\n <li>Investors may be best shifting toward inflation-indexed bonds like VTIP, which should outperform inflation, while SGOV appears likely to underperform it in 2025-2026.</li>\n</ul><img>\n<p class=\"item-caption\"></p>\n<p class=\"item-credits\">Richard Drury</p>\n<div class=\"inline_ad_placeholder\"></div>\n<p>My most prominent portfolio position has been short-term government debt for the better part of two years. Although short-term Treasury bills lik<span class=\"highlighted_text\">e the ones held in the iShares 0-3 Month Treasury Bond ETF (<span class=\"ticker-hover-wrapper\">NYSEARCA:<a href=\"https://seekingalpha.com/symbol/SGOV\">SGOV</a></span>) </span>have not had the same</p></body></html>","htmlText":"<html><head></head><body><ul>\n <li>SGOV is only a good investment if we can safely assume its yield will be above the inflation rate, which has been the case since 2022.</li>\n <li>The market is bracing for a total 50-75 bps rate cut over the next year, which seems likely given low and falling hiring rates, pointing toward a sustained unemployment increase.</li>\n <li>Geopolitical risks and potential tariffs could increase inflation, particularly in goods, while service inflation remains elevated due to shortages in skilled jobs.</li>\n <li>Given historical precedence and the last jumbo rate cut, I expect significant inflationary monetary and fiscal stimulus in response to a further increase in unemployment.</li>\n <li>Investors may be best shifting toward inflation-indexed bonds like VTIP, which should outperform inflation, while SGOV appears likely to underperform it in 2025-2026.</li>\n</ul><img>\n<p class=\"item-caption\"></p>\n<p class=\"item-credits\">Richard Drury</p>\n<div class=\"inline_ad_placeholder\"></div>\n<p>My most prominent portfolio position has been short-term government debt for the better part of two years. Although short-term Treasury bills lik<span class=\"highlighted_text\">e the ones held in the iShares 0-3 Month Treasury Bond ETF (<span class=\"ticker-hover-wrapper\">NYSEARCA:<a href=\"https://seekingalpha.com/symbol/SGOV\">SGOV</a></span>) </span>have not had the same</p></body></html>","text":"SGOV is only a good investment if we can safely assume its yield will be above the inflation rate, which has been the case since 2022. The market is bracing for a total 50-75 bps rate cut over the next year, which seems likely given low and falling hiring rates, pointing toward a sustained unemployment increase. Geopolitical risks and potential tariffs could increase inflation, particularly in goods, while service inflation remains elevated due to shortages in skilled jobs. Given historical precedence and the last jumbo rate cut, I expect significant inflationary monetary and fiscal stimulus in response to a further increase in unemployment. Investors may be best shifting toward inflation-indexed bonds like VTIP, which should outperform inflation, while SGOV appears likely to underperform it in 2025-2026. Richard Drury My most prominent portfolio position has been short-term government debt for the better part of two years. Although short-term Treasury bills like the ones held in the iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV) have not had the same","highlighted":1,"essential":1,"paper":2,"likeSize":4,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/375541508112536","repostId":0,"isVote":1,"tweetType":1,"viewCount":85,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":["SGOV"],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":true,"length":906,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/375541508112536"}