US 3-Month T-Bill Yields Plunge Below 0%

Demand for the relative safety of short-term government debt prompted investors Tuesday to buy up $32 billion in new three-month bills (UST3MO) (usually considered as a risk-free benchmark return on U.S. assets) at an unprecedented yield of 0%. The rock-bottom yield is the lowest since the government began auctioning the securities in 1929 demonstrating once again that investors are eager to simply get their principle back.

U.S. Treasury 3 Month

According to WSJ, the three-month yield fell to between negative 0.1% and 0.2%. However, there was no confirmation if trades were executed at these levels. The yield on the benchmark 10-year note (UST10Y) rose by 28/32 yielding 2.65%. The five-year price rose by 18/32 and yielded 1.609%, while the two-year gained 5/32, for a yield of 0.854%. 30-Year Treasury rose 2 20/32, yielding 3.044%.

Despite some signs that credit conditions are improving, minus-zero-yields suggest that the appetite for the safety of T-bills isn’t lessening. Investors are still seeking a haven in the relative safety of government debt as well betting on a deflationary scenario in the coming months.

Treasurys have returned 11.7% so far this fiscal year, according to an index compiled by Merrill Lynch (MER).

The Treasury Dept. announced Monday (Dec. 8) it will sell $28 billion in three-year notes on Wednesday and $16 billion in 10-year notes on Thursday.

Photo: BigCharts

About Ron Haruni 1036 Articles
Ron is the Co-Founder & Editor in Chief of Wall Street Pit. Web Site: Wall Street Pit

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