" The sale of Treasury Bills is rarely newsworthy, given that it's the one market where the notion of buying and selling "action" really doesn't fit (Treasuries are the original widows & orphans fund, after all).
But, Treasuries made big news today, even if the news stories themselves didn't exactly get it right. The nation's largest financial newspaper ran a headline which said "T-Bill Yields Fall to Historical Lows," when in truth the yield on three-month Treasuries actually fell BELOW ZERO during some of the trading session. That literally means lenders were paying the borrower+ to hold the money.
And who, exactly, was crazy enough to purchase securities with a yield of zero (or less)? Umm, I don't have any names, but that's really the wrong question. The better one to ask is: Was the $32 billion supply of ZERO-YIELD securities available at today's Treasury auction enough to meet the demand?
Well, I think the answer is "no"...
...Since the bids for that supply amounted to $126 billion.
Now, one could say that news stories about this were trying to describe the indescribable, and perhaps that's true. Yet I am aware of a certain word that would at least help to offer a fitting description, although this word was absent in all four news accounts that I read. I'll put it in rhetorical terms:
If accepting zero yields just to get back your principle isn't deflation, then I don't know what is.
That's right. In a deflationary environment, cash is king -- even (or especially) when the media fails to see this simple fact. When traditional investment vehicles are losing value, it's not hard to conclude you're better off than a lot of other folks just by getting back your principle.
Deflation isn't theoretical any longer -- and on a day when yields fall below zero, I'd say that phrases like "creeping threat" don't reflect how real the risk truly is. It's here. Now."
