US Treasury Bills Trade at Negative Rates
Dec. 9 (Bloomberg) — Treasuries rose, pushing rates on the three-month bill negative for the first time, as investors gravitate toward the safety of U.S. government debt amid the worst financial crisis since the Great Depression.
The Treasury sold $27 billion of three-month bills yesterday at a discount rate of 0.005 percent, the lowest since it starting auctioning the securities in 1929. The U.S. also sold $30 billion of four-week bills today at zero percent for the first time since it began selling the debt in 2001.
What should we take from this?
One thing, certainly, is the obvious – an 80 year low in any major financial indicator is self-evident proof that something BIG is underfoot.
The Bloomberg writers attribute this historical event to institutional purchasers’ collective desire to have “something of value” on their books for their year end balance sheets. There’s probably something to that. The individuals making the decision to buy zero interest securities are employees of major institutions who have to answer to somebody about the riskiness of their portfolios.
But even if we accept that explanation as the entire story we are still left with the ugly fact that in today’s environment “something of value” means getting your money back.
The folks at Elliott Wave International are saying that this auctions is screaming “Deflation.” It’s hard to argue against that.
Related Posts
RSS
