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# US Treasury 3-month bill yield below zero for first time

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VP
Joined: 28 Feb 2008
Posts: 1323

Kudos [?]: 127 [0], given: 6

Schools: Tuck
US Treasury 3-month bill yield below zero for first time [#permalink]

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10 Dec 2008, 15:04

Interesting! So people are willing to take a negative return just for the luxury of putting their money somewhere safe?

RF
_________________

Kudos [?]: 127 [0], given: 6

Senior Manager
Joined: 30 Jul 2007
Posts: 385

Kudos [?]: 59 [0], given: 5

Location: Europe
Schools: St. Gallen '09
Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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13 Dec 2008, 02:59
refurb wrote:

Interesting! So people are willing to take a negative return just for the luxury of putting their money somewhere safe?

RF

The way I interpret this is that whoever is buying bonds at a negative yield is very worried about keeping their cash in a financial institution and would rather get it out of the bank and accept a negative yielding promise to pay from the US government.

Kudos [?]: 59 [0], given: 5

VP
Joined: 05 Aug 2007
Posts: 1499

Kudos [?]: 211 [0], given: 22

Schools: NYU Stern '11
Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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13 Dec 2008, 08:08
That's pretty crazy considering the FDIC has promised to insure every single dollar in deposits at a financial institution like Citi (with no restrictions on the amount) until December 31, 2009.

The way I interpret this is that whoever is buying bonds at a negative yield is very worried about keeping their cash in a financial institution and would rather get it out of the bank and accept a negative yielding promise to pay from the US government.

Kudos [?]: 211 [0], given: 22

Senior Manager
Joined: 30 Jul 2007
Posts: 385

Kudos [?]: 59 [0], given: 5

Location: Europe
Schools: St. Gallen '09
Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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30 Dec 2008, 04:54
solaris1 wrote:
That's pretty crazy considering the FDIC has promised to insure every single dollar in deposits at a financial institution like Citi (with no restrictions on the amount) until December 31, 2009.

The way I interpret this is that whoever is buying bonds at a negative yield is very worried about keeping their cash in a financial institution and would rather get it out of the bank and accept a negative yielding promise to pay from the US government.

They can promise all they want. Doesn't mean you'll get your money on time or at all.

No way FDIC can guarantee those deposits with the limited assets they have.

Kudos [?]: 59 [0], given: 5

CEO
Joined: 17 May 2007
Posts: 2947

Kudos [?]: 674 [0], given: 210

Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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30 Dec 2008, 15:43
The Australian govt. has given similar guarantees. But guarantees don't mean much in times such as these. I think that high net worth folks would try to diversify to protect assets and these bonds would be form part of a portfolio that would contain other safe bets (such as gold).

solaris1 wrote:
That's pretty crazy considering the FDIC has promised to insure every single dollar in deposits at a financial institution like Citi (with no restrictions on the amount) until December 31, 2009.

The way I interpret this is that whoever is buying bonds at a negative yield is very worried about keeping their cash in a financial institution and would rather get it out of the bank and accept a negative yielding promise to pay from the US government.

They can promise all they want. Doesn't mean you'll get your money on time or at all.

No way FDIC can guarantee those deposits with the limited assets they have.

Kudos [?]: 674 [0], given: 210

Director
Joined: 10 Jun 2006
Posts: 624

Kudos [?]: 55 [0], given: 0

Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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31 Dec 2008, 15:29
solaris1 wrote:
That's pretty crazy considering the FDIC has promised to insure every single dollar in deposits at a financial institution like Citi (with no restrictions on the amount) until December 31, 2009.

The way I interpret this is that whoever is buying bonds at a negative yield is very worried about keeping their cash in a financial institution and would rather get it out of the bank and accept a negative yielding promise to pay from the US government.

They can promise all they want. Doesn't mean you'll get your money on time or at all.

No way FDIC can guarantee those deposits with the limited assets they have.

How can you say that the guarantee of the FDIC (the US Federal Government) is worthless while at the same time saying that the guarantee of US Treasury Bills (the US Federal Government) is not worthless? Pretty illogical IMO.

Kudos [?]: 55 [0], given: 0

Senior Manager
Joined: 30 Jul 2007
Posts: 385

Kudos [?]: 59 [0], given: 5

Location: Europe
Schools: St. Gallen '09
Re: US Treasury 3-month bill yield below zero for first time [#permalink]

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01 Jan 2009, 18:06
IHateTheGMAT wrote:
How can you say that the guarantee of the FDIC (the US Federal Government) is worthless while at the same time saying that the guarantee of US Treasury Bills (the US Federal Government) is not worthless? Pretty illogical IMO.

I'm not trying to be defensive, but I never said anything regarding the worth or worthlessness of US Treasury Bills. I only stated the fact that a T-bill is a "promise to pay". And, as I said in the other post you reference, they (the US Federal Government) can promise all they want.

Next time, I'll be sure my sarcasm towards the US Federal Government's current insolvency is more apparent in each of my posts

Oh....but I forgot we can print our own currency....hmmm....moral hazard?

Kudos [?]: 59 [0], given: 5

Re: US Treasury 3-month bill yield below zero for first time   [#permalink] 01 Jan 2009, 18:06
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