Another economic panic - Three-month U.S. Treasury rates reaching negative territory. With the stock market crashed, commodities sinking, housing underwater and banks starved of liquidity, it seems that investors are searching safe heaven at the US Treasury. In other words investors are ready to “pay” the US Treasury for “borrowing” their capital where they think that they can protect the values of their capital. But that also means that borrowing becomes even more difficult with widening spreads. The only silver lining is that bailouts would look much cheaper!
Three Month T-Bill Rate [12/9/2008]
[The three-month T-bills rate is lowest rate since the US Treasury started auctioning the securities in great depression era according to Bloomberg.com]
© Rohit Deshpande
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