Investors buy negative yield and zero interest Treasury bills – i.e., they’re intentionally taking a loss because it’s better than risking the market

This is a first. But looking at how much money everyone has lost in the market, getting a return on your investment of nothing, or even a slight loss, is now considered a bargain. From the Times:

Investors were so desperate to put their cash into government notes that they were willing to pay a penalty for the privilege: three-month notes traded at a negative yield, meaning that investors will receive about 99 cents on the dollar in return after the note matures. The news sends a sobering signal: in this environment, losing only a small amount of money on an investment is tantamount to coming out ahead.

Four-week Treasury bills, considered one of the safest possible short-term investments, traded at zero percent yields, and investors snapped up $30 billion worth. It was the lowest yield since the Treasury began issuing the notes in 2001.

A scramble into Treasury notes helps to line the federal coffers, providing money at a time when the government is embarking on ambitious stimulus projects with a price tag in the billions. Bank bailouts, credit facilities and public works programs will all be helped by the influx of investors’ cash.

The primary impetus behind the move into Treasuries is a flight to safety. But seasonal factors are also at work.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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