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People are willing to take no return in exchange for a safe place to keep their cash — scary:
The results from the just reported 4 week bill auction reveals a yield of 0.000% and that is not a misprint. The auction last week yielded .04%.
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| By: Ari Tuesday December 9, 2008 7:15 pm | |
People are willing to take no return in exchange for a safe place to keep their cash — scary:
The results from the just reported 4 week bill auction reveals a yield of 0.000% and that is not a misprint. The auction last week yielded .04%.
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3 Comments
Wow. 40 cents on my thousand-dollar bond.
Just wow. I presume that the yield is so low because the bill is in such high demand and doesn’t need a high interest rate to make it attractive to investors?
No, it’s basically people looking for an ultra-safe place to park money for a little while. These are four-week notes, and folks may not be trusting banks a lot right now.
If you’ve got something over $100K you need to stash someplace safe, you have a problem in the current market. You can split it up across institutions, but that’s a bit of a pain. It’s even more of a pain since the monetary control regs put in place under USA-PATRIOT.
Deposits over $100K aren’t insured. If you’re really nervous, one place you can park large sums safely is short-term T-bills. What I haven’t seen from the auction that would be revealing is the number of buyers and size of the bills that were sold. If it’s mom-and-pop parking small sums, this bit is more worrisome than if it’s Nelson Rockefeller parking a quarter mill for some inscrutable purpose.
Ugh. FDIC insured accounts are $250K, but the same principle applies.
I’m still looking to find the numbers on the auction…