The 3-month Treasury bills were traded in negative yield yesterday. The Yield fell to between negative 0.1% and 0.2%. However, none couldn't confirm if trades were executed at these levels. By afternoon trade, the yield moved back into positive territory to 0.04%. The Negative yield reflects that market is hunger for safety.
According to Kathy Lien, A forex Analyst, the only reason why anyone would buy Treasury bills at negative real return is if they believe that recession will deepen, driving bond prices higher and yields further below zero.
From her experience, the bond markets tend to have it right which suggests that we may see further losses in the currency and equity markets this week. The only thing that could help would be a bailout for the automakers and even then, the positive impact on investor sentiment may be limited.
Related Posts :
Sources :
- Wallstreet Pit: What Zero Yield in Treasury Bills Signal for Currencies, December 9, 2008
- The Wall Street Journal: T-Bill Yields Fall to Historic Lows, December 9, 2008
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