Money Coming Off the Treasury Table

After floating around the 0% level for a couple of months, yields on 1-Month and 3-Month Treasury Bills have finally started to move higher over the past few days. The 1-Month yield has moved up to 0.21% from 0.005% just last Wednesday, while the 3-Month has moved up to 0.31%. Investors fled to Treasuries from money-market funds and anything else that involved the smallest hint of risk during the fourth quarter of 2008.

The fact that some of this money is now coming out of the Treasury market is a good sign. Even the 10-Year Treasury yield has risen from just above 2% at the start of the year to its current level of 2.8%.

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Comments

[Roowns:]

It's just a sign of inflation coming into play. I'd be careful on the magnitude of that. High inflation is the last thing we need now. Let's hope Fed made his math correctly.

Feb 04 06:29 AM

[kelm:]

Inflation is one aspect. The other is simply the volume of supply coming to market and that is starting to make investors concerned about the wisdom of US treasuries. That is, fear of getting in and getting hit if rates spike up hard.

The Fed has target fixation on deflation. You can almost be assured they did the math wrong.

Feb 04 08:58 AM