What does it mean? It means that the government is going broke and trying to bribe investors to put money in T-Bills.
“What does it mean? It means that the government is going broke and trying to bribe investors to put money in T-Bills.”
That’s one way to put it. The other is that given the events of last week (credit default swaps on gvt debt nullified by the EU), interest rates are going to climb on government debt everywhere. That scares the bejeezus out of the feds. This will, they think, lower interest rates on treasuries.
It will, for about a week. The price is that traders can now borrow more against the value of the treasury futures they are trading. So when interest rates do go up, the deleveraging will be harder and faster.