It's Official - Negative Interest Rates

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Call_Me_Op
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It's Official - Negative Interest Rates

Post by Call_Me_Op » Thu Mar 26, 2020 7:38 am

Almost all of my T-Bills are showing negative interest rates this morning. (That is, they are priced above the maturity value.) They are 1-6 months to maturity. Only one position is not negative, and that one has a YTM of 0%.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

bberris
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Re: It's Official - Negative Interest Rates

Post by bberris » Thu Mar 26, 2020 7:46 am

I see that too. But I think if I tried to sell I wouldn't get that price; spreads. Anyone want to give it a shot? I'm on TDA if that matters.

Topic Author
Call_Me_Op
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Re: It's Official - Negative Interest Rates

Post by Call_Me_Op » Thu Mar 26, 2020 7:52 am

bberris wrote:
Thu Mar 26, 2020 7:46 am
I see that too. But I think if I tried to sell I wouldn't get that price; spreads. Anyone want to give it a shot? I'm on TDA if that matters.
I suspect you may be right - but it is certainly possible that some entities are willing to purchase a treasury at negative rates.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

bberris
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Re: It's Official - Negative Interest Rates

Post by bberris » Thu Mar 26, 2020 8:47 am

GORXX, the cash sweep vehicle I selected for TDA, is showing 0.01 % yield, and -0.28 % unsubsidized. Are they really eating that? Not a good time to run a US treasury money market fund. I'm guessing they will close it for new cash soon.

rascott
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Re: It's Official - Negative Interest Rates

Post by rascott » Thu Mar 26, 2020 8:51 am

Call_Me_Op wrote:
Thu Mar 26, 2020 7:38 am
Almost all of my T-Bills are showing negative interest rates this morning. (That is, they are priced above the maturity value.) They are 1-6 months to maturity. Only one position is not negative, and that one has a YTM of 0%.
First time since...........2015

Topic Author
Call_Me_Op
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Re: It's Official - Negative Interest Rates

Post by Call_Me_Op » Thu Mar 26, 2020 9:11 am

Good gauge of the level of fear.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Phineas J. Whoopee
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Re: It's Official - Negative Interest Rates

Post by Phineas J. Whoopee » Thu Mar 26, 2020 8:11 pm

Bonds, including T-bills, have yields, not interest rates. The Fed does not set bond yields. It has influence, but not control.

It is not at present possible, but only as a matter of technology and policy, for competitive bidders to request negative yields in the primary nominal US Treasury market. The policy and technology can be changed without Congressional action.

It is, and has been, possible for competitive bidders to request negative real yields on TIPS, and negative yields on Floating Rate Notes, FRNs.

To the extent secondary market nominal Treasuries have negative yields it's because the buyers and sellers agreed to trade at that level. Nobody is forced to buy secondary-market negative-yield securities if they don't want to. It may well make business sense for some, depending on circumstances.

PJW

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