T-Bill Yields Turn Negative

crasher

The last time Bill yields turned negative (in essence investors paying the Government to hold their money for them) was in the days after the Lehman bankruptcy, when the entire world was about to blow up. So why did Bill yield for January maturity just turn negative once again? In other words, why are investors suddenly running for the hills? As Dow Jones reports, January and February bills hit a yield of -0.03% earlier. Some explanations have to do with Bill scarcity, as nobody wants to be exposed to anything beyond 3 months down the curve, let alone 1 year. However, the fact that bond investors may not be buying into the whole recovery BS (or just realize that there is nobody willing to roll near-dated treasurys into longer-tenor pieces of paper) and are once again running scared and willing to pay Ben Bernanke to hold their money for them should be very, very troubling. Additionally, could there be something more pressing and/or catalytic? We have not heard peep from any of the big banks in a while...

Even more surprisingly, the 1-3 month bill curve has also gone negative, indicating that there is something veru much awry with demand along the Treasury curve.

Positive_Theta

Good information. Thanks!

yaobooyao

If the worst case is true again,  my dear GOLD will sky rocket high day after day again.

Not a single chance to buy dip then.

hifive

nasd

Please don't worry because  ...  YES WE CAN!

ppteam

Diffusion

http://online.wsj.com/article/SB ... 45820987908700.html

Some Treasury Yields Turn Negative

...

Bill yields last fell below zero in late 2008 amid the financial market panic that was triggered by the bankruptcy of Lehman Brothers Holdings Inc. The decline this time, though, isn't driven by the same sorts of fears -- it is more about a scarce supply of T-bills amid strong demand for safe assets, given the hazy economic outlook.

The amount of T-bills in the market has shrunk with the government letting the bills in its Supplementary Financing Program — which financed the ballooning deficit though the issuance of bills — mature rather than sell new bills to roll over the debt. At the same time, money-market investors face fewer options to park their cash.

...

I think this simply means that there is too much liquidity swamping the money market, where investors park their cash. Once investors realize that they have to dance with the music played by Fed, those money has to flow into other risky asset.

hbw

The last time Bill yields turned negative (in essence investors paying the Government to hold their money for them) was in the days after the Lehman bankruptcy, when the entire world was about to blow ...
crasher 发表于 2009-11-19 22:13

请问你认为对美元有何影响？

Braveheart

Does anyone know how to buy T-Bill?

X!nG

请问你认为对美元有何影响？
hbw 发表于 2009-11-20 00:16

Dollar will be skyrocketing...

As expected...

crasher

It may be related to this rumor too. Anyone with an interest-bearing checking account must be alerted. BTW, Citibank says it will no longer participate FDIC insurance for their checking accounts after 12/31/2009. This seriously raises the concerns over solvency of some big banks.

If your bank account pays interest on your checking ("transaction") account, under the NEW TEMPORARY LAWS ("FDIC Transaction Guarantee Program"), the FDIC IS NOT covering your account if your bank fails. This refers to a REGULAR CHECKING ACCOUNT, not a money market account; however, if you have a N.O.W. checking account (Negotiable Order of Withdrawal), and if the interest rate does not exceed .50%, then your account is covered under FDIC. (So if your bank increases the interest rate above .50%, your account is no longer covered.)

There's much more....like if you have a savings account that is linked to an interest-bearing checking account, it appears that the savings account could also be in jeopardy if there is sweeping involved. (B of A's Promotion of rounding off dollars and sending the balance to your savings account is ONE form of sweeping.)

There's more, e.g., attorneys petitioned to get their transaction checking accounts (kinda like a legal escrow accounts ) covered by the FDIC ----the FDIC agreed and this is the the only exception.

The most important thing to know....DO NOT HAVE A CHECKING ACCOUNT THAT PAYS INTEREST.

Read the sign posted in your bank lobby. It states specifically that FDIC covers NON-INTEREST checking accounts. This is a very slick bait & switch. The attorneys aren't stupid. They saw what the FDIC was doing and so they petitioned and got an exception.

I became suspicious when B of A & Fifth Third started giving interest on their standard checking accounts. I knew they weren't being generous for nothing. A friend of mine confirmed that this happened to him also. He couldn't figure out why they started giving pennies away.

I can explain about the dates also....but they're really irrelevant because if a bank fails, the New Temporary FDIC laws are in effect----for some banks until 12/31/09 and for other banks through mid June 2010.

Right now, the FDIC can cover bank failures, but if a huge bank fails, that's a different story.

p.s. just checked my checking account. It covers up to $250,000. The temporary FDIC program is covering unlimited amount in checking account until 12/31/2009.

Note: Beginning January 1, 2010, Citibank will no longer participate in the FDIC’s Transaction Account Guarantee Program. Thus, after December 31, 2009, funds held in noninterest-bearing transaction accounts (non-interest and interest-bearing checking accounts) will no longer be guaranteed in full under the Transaction Account Guarantee Program, but will be insured up to $250,000 under the FDIC’s general deposit insurance rules.

crasher

Does anyone know how to buy T-Bill?
Braveheart 发表于 2009-11-20 03:04

The easiest way to do is to buy ETFs. Short term SHY, SHV; mid term IEI, IEF; long term TLH, TLT.

X!nG

It may be related to this rumor too. Anyone with an interest-bearing checking account must be alerted. BTW, Citibank says it will no longer participate FDIC insurance for their checking accounts after ...
crasher 发表于 2009-11-20 07:40

Again, I repeat, the worst mistake ever made by human race is lowering interest rate to 0% level...

hbw

13# X!nG

不但如此，而且这个“错误”的将持续超出想象的一段时间。关键是探究背后的目的。

X!nG

13# X!nG

不但如此，而且这个“错误”的将持续超出想象的一段时间。关键是探究背后的目的。
hbw 发表于 2009-11-20 08:26

Give you one clue:

China will end up with hyperinfation, and RMB will depreciate dramatically instead of appreciation which people are expecting for...

hbw

15# X!nG

游戏的结果看游戏的规则制订者。大局是你说的那样，关键是节奏和幅度。好莱坞就是美国的宣传部，《2012》是有寓意的。

进入WTO与货币自由兑换是配套机制，中国模式在收尾。逼到最后是RMB贬值危机，不得不加入自由兑换的行列，但还是避免不了恶性贬值的命运。

X!nG

15# X!nG

游戏的结果看游戏的规则制订者。大局是你说的那样，关键是节奏和幅度。好莱坞就是美国的宣传部，《2012》是有寓意的。

进入WTO与货币自由兑换是配套机制，中国模式在收尾。逼到最后是RMB贬值危机， ...
hbw 发表于 2009-11-20 09:11

Anyway, it's nice dicussing with you...

I am sure more people will join our discussion in the near future...

Perhaps, very soon...

hbw

好的，欢迎讨论。

T-Bill Yields Turn Negative 怎么没有高人继续解释原因及影响？

SpringMountain

It may be related to this rumor too. Anyone with an interest-bearing checking account must be alerted. BTW, Citibank says it will no longer participate FDIC insurance for their checking accounts after ...
crasher 发表于 2009-11-20 07:40

This is scary if it's true. Can you give the source? I've been reading thru the http://www.fdic.gov/deposit/deposits/index.html but have not see the points yet. Can someone dig along?

X!nG

好的，欢迎讨论。

T-Bill Yields Turn Negative 怎么没有高人继续解释原因及影响？
hbw 发表于 2009-11-20 10:16

Money flows back to T-bills for save haven as some of investors realized that the current inflationary pressure is indeed overhyped...

Again, stagflation is possible (and will be the ultimate, 'best' senario you can imagine)...

However, I repeat: we are still in the deflationary phase of the game...