90 day T-bill rate drops to 0.23%. What’s next, negative yields?
17 Sep 2008 9: 04 am | Filed under: bonds, deflationThis is a serious panic. Bloomberg informs us that rates haven’t been this low since 1954.
Click image for sharper view. Source: Bloomberg
Yields can go negative if people are desperate enough for a safe haven. In deflation negative nominal yields can be positive real yields. CPI went slightly negative in August. Expect significant price drops in everything over the next couple of years — including your own labor!
The long end of the curve still has plenty of room to come down. The 10-year should be 2% before long, and the 30-year could fall under 3%. Anyone who thinks that lower yields are good for stocks needs to explain this:
30-year Treasury yield in blue, S&P 500 in red:
Click image for sharper view. Source: Yahoo! Finance
Welcome to the deflationary depression of the 2000s. Got cash?
- Tags: deflation, flight to safety, t-bills, treasury bonds, yields
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(3 votes, average: 4.67 out of 5)
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Daffyd Jones
December 9th, 2008 at 3:58 pm
Yep, negative yields, as of today (9th Dec)
The end of days is nigh…