Yield on Treasury Bills Plummets

The yield on treasury bills plummeted today as investors sought them as a safe haven. Clearly, the impact of the credit crisis is not over.

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.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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  • Ralph Smith

    August 22, 2007

    It is a staggering fall. There is real fear now.

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