Posted on 03/25/2020 2:18:12 PM PDT by Leaning Right
The coronavirus crisis has brought another first to U.S. financial markets — negative yields on government debt.
Yields on both the 1-month and 3-month Treasury bills dipped below zero Wednesday, a week and a half after the Federal Reserve cuts its benchmark rate to near zero and as investors have flocked to the safety of fixed income amid general market turmoil.
It was the first time that happened in 4½ years, when both bills briefly flashed red and yields fell to minus-0.002% each. The readings Wednesday were well below those. The one-month traded at minus-0.053% while the three-month was at minus-0.033% around 2:35 p.m. ET.
(Excerpt) Read more at cnbc.com ...
Does this mean that my ARM, will reset lower on its reset date in August?
There is a difference between yields and central bank rates. There is an opportunity to sell these bonds at a profit if rates go lower.
Negative rates bring hyper-inflation.
We will all be billionaires then, and a loaf of bread could probably cost $100 million.
Don’t the Chicomms hold a lot of US Treasury Bills, against our debt? Or am I thinking of another financial unit?
> There is an opportunity to sell these bonds at a profit if rates go lower. <
I thought about that. A note yielding -1% is more valuable that a note yielding -2%. But I still can’t wrap my head around why anyone would buy such a note in the first place. My only guess is that it’s people with huge amounts of cash to park.
We live in interesting times, indeed.
Why would anyone purchase a bond with a Zero Percent interest rate?
Are these bonds Junk Bonds?
I looked it up the other day. Evidently China holds a bit more than $1 trillion in U.S. Treasury Bonds. And given that China started this virus mess, those bonds should be cancelled.
In theory, these bonds are the safest investment on the planet. That's why people will accept negative interest.
I am very confused. If you have cash to park, and you get a negative interest rate with these bonds, won’t you come out ahead if you just stick your cash in your checking account?
Good idea. That’d seriously hurt their economy.
The Fed will be buying most of them I would imagine...a “take out a new credit card to pay the old credit card” kinda thing.
Let’s get some of the trillions in those banks accounts/401ks via fees. (Paraphrasing) If you don’t have it in your hand and can’t protect it with a weapon, YOU DON’T OWN IT. - Ann Barnhardt
Small depositors like individual consumers are so far not being charged on savings. The idea is politically toxic, especially in Germany.
But the low rate environment raises questions about preserving wealth, especially for those trying to save for retirement. German newsmedia are full of stories about “penalty rates”and criticism of the European Central Bank for, as they put it, expropriating savers.
[We live in interesting times, indeed.]
Yes, we do indeed.
Imagine if every government around the world winds up paying people to stay home.
Well, fortunately, that could never happen.
These are not junk bonds. Junk bonds are issued by weak companies (or governments) that might not be able to give you your principal back
These bonds are issued by the U.S. Treasury. So they are safe as safe can be. So you will certainly get your principal back, minus the negative interest rate.
Is it actually 0% ?
I will guess the “Yield” is negative because the underlying bond is selling above the “Par” value?
It’s probably based on the 30 year or the “Prime” rate.
Excellent news,
Let our US Treasury finance about 50 trillion, wipe out the deficit, refi all the national debt, let revenue flood our Treasury creating a massive surplus, lower our taxes to pre-1913 levels.
Invest in every American with a pulse after they complete reeducation camp where they are mandated to take and pass a single course, ‘Capitalism 101’.
Old folks can donate their bail-up to their future capitalist grandbabies.
Anyone with a history of socialism gets a one-way ticket to Cuba or Venezuela or a ten year sentence cleaning the streets of San Pelosi.
Democrats pay restitution for eternity for killing 100 million babies.
After a few years of the above, it’s time for TRUMP ON RUSHMORE.
That means all hell is about to break loose.
Hey....didn’t our great POTUS suggest that, already? :-)
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