3-Month Treasuries Will Now Get You $4 on $10,000 Per Year

Three-Month Treasuries are now yielding an unbelievable 4 basis points.  That means a $10,000 investment will get you a whopping $4 per year.  Before equity markets opened today, the yield was at 0.23%, and it continued lower throughout the day.  As shown below, the yield hasn't been this low since the 1930s.  Investors have clearly lost faith in pretty much every asset class except for government-backed bonds.  And who knows how long that faith will last.

In the bottom chart we highlight the yield curve, which was inverted at the start of 2007.  Now the curve has moved back to the top of its historical range since the 1960s.

click to enlarge

Comments

[ev:]

I keep watch of the Treasury yields, and have been trying to understand exactly what is going on over the last several days. Would I be correct in assuming the dollar is going to follow the Treasury yield. In other words will we see a weaker dollar, and is that why there are renewed calls for investing in the oil and gas sector at a time when the price for a barrel of oil has reached a 7 month low?

2008 Sep 17 07:26 PM

[buyitcheap:]

The action seems to be in the long end - they're trading at 122 vs. 100 par -- when that premium gets sucked out, they are going to deflate rapidly - a great short...

2008 Sep 17 07:52 PM

[MarvinMBA:]

You might as well keep your short term money in the mattress literally....at least it might be there when you need it...why tie it up for a few months for nothing...even a money market fund would do better...but I suppose if you have the big bucks you might have to spread it around in mm all over the country...but so what,,,its better than virtually nothing.

2008 Sep 17 09:34 PM