For anyone out there thinking we were starting to get this whole credit crunch thing under control: kidding! Look what history-making we accomplished today (via CNBC.com via Reuters):
Investors fearful of deflation and riskier assets scrambled to hand over cash to the US Treasury in return for no interest at an auction Tuesday, while some T-bill rates fell below zero in the market…
The U.S. Treasury Department said it sold four-week bills at a high rate of 0.000 percent, a level never before seen, in a $30 billion auction.
When Treasury bill rates turn negative it shows that investors are so concerned about the safety of other assets that they are willing to effectively pay the U.S. government a fee to look after their money…
“There’s still a ton of fear,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “People are now paying the government to take their money. Something is wrong.
My favorite man-on-the-street ramification so far: some money market fund managers are closing their doors to new investors so they don’t have to buy securities with pathetic yields and drag down returns.
Barbara!