Interest Rate Roundup

Tuesday, December 09, 2008

Four-week bills yield nothing. Yes, nothing.

Can you truly get money for nothing? Apparently yes, if you're the federal government. The Treasury just sold $30 billion in four-week T-bills at a yield of ... drum roll please ... nothing! Literally 0%. Think that's odd? Well, how about the fact the bid-to-cover ratio was 4.2. In other words, there were $4.20 worth of bids for every $1 in bills being offered. The bid/cover ratio hasn't been higher than that since January 2002.

Money for nothing is all well and good. But I have to ask, did Uncle Sam -- in the immortal words of Dire Straits -- also get any "chicks for free?" That's the true measure of success.


  • Your recommendation to go into short term Treasury only investments for principal protection might provide a negitive return after expenses at zero return. These are some crazy times.

    What scares me is that the Fed and Treasury are making things up as the days go by to see what sticks.

    By Anonymous Anonymous, at December 10, 2008 at 10:58 AM  

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