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--- On Tue, 12/9/08, Doug Henwood <dhenwood at panix.com> wrote:
> From: Doug Henwood <dhenwood at panix.com>
> Subject: [lbo-talk] T-bill yields go negative
> To: "lbo-talk" <lbo-talk at lbo-talk.org>
> Date: Tuesday, December 9, 2008, 4:10 PM
> <http://www.marketwatch.com/news/story/us-stocks-finish-sharply-lower/story.aspx?guid=%7BDB0F401A%2DCD0D%2D437C%2DA19F%2DF6AE9FE29B47%7D&siteid=bnbt>
>
> NEW YORK (MarketWatch) -- Treasurys headed higher Tuesday,
> helped by a strong bill auction that showed investors purely
> wanted assurance that they would get their principal back.
>
> The market reached the highs of the day after the Treasury
> Department sold $32 billion in four-week bills at a yield of
> 0%.
>
> ---
>
> <http://blogs.wsj.com/marketbeat/2008/12/09/three-month-bill-yield-goes-negative/>
>
> December 9, 2008, 2:16 pm
> Three-Month Bill Yield Goes Negative
> Posted by David Gaffen
>
> In bond markets, there are two numbers to worry about:
> price, and yield. Now, there is no yield to speak of.
> At some point during the afternoon, the yield on the
> three-month Treasury bill dipped below 0%, according to
> traders, as investor desire to hold short-term liquid debt
> trumps all else.
>
> Year-end needs for liquidity probably play a part in this,
> according to one fund manager, but it’s still insane.
> “It’s the modern version of stuffing it into your
> mattress,” says Thomas di Galoma, head of trading at
> Jefferies & Co. “You just can’t make it up.”
>
> A negative bill yield means investors are willing to pay to
> get the securities and forego the interest they’d normally
> receive. It comes one day after a three-month bill auction
> that yielded 0.005%, the lowest auctioned yield since 1941,
> and at a time when investors, in part because of year-end
> worries, are “trying to hide their money for year-end in
> the safest instrument known to mankind, and that’s
> Treasury bills,” Mr. di Galoma says.
>
> Most of the Treasury bill curve is sporting a yield of
> zero, or just about. The one-month bill was lately yielding
> 0.025%; the six-month bill was at 0.25%, and the one-year
> bill sported a yield of 0.4%.
>
> — With reporting by Min Zeng
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