Risk-adverse investors today bought up treasury bills, causing yields to fall the most in 17 years. The yield on 3 month treasuries dropped .66 percentage points yesterday, the most since the stock market crash of 1987. Money markets sold their asset backed securities for the safety of T-bills.
At the same time, the yield on 10 year bills moved lower by only one basis point 4.62 percent. A basis point is .01 percentage point. Interest rate future traders see a nearly 100% chance the Fed will lower its overnight lending rate (the rate banks use to lend to each other) from 5.25 to either 5% or even 4.75%.
Overall, it looks like many in the know are showing with their money how nervous they are about the short-term and are moving their money into safe havens until the dust around the credit crunch clears.
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The Fate of the Financial World Rests with the Montes by Cindy Daniels - Aug 16, 2007
Fed Cuts Discount Rate by 50 Basis Points to 5.75% by Sam Cass - Aug 17, 2007.
