90 day T-bill rate drops to 0.23%. What’s next, negative yields?
Posted By Mike On Sep 17, 2008 @ 9:04 am In bonds, deflation | 1 Comment
This is a serious panic. [1] Bloomberg informs us that rates haven’t been this low since 1954.
[2] 
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:
[3] 
Click image for sharper view. Source: Yahoo! Finance
Welcome to the deflationary depression of the 2000s. Got cash?
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Article printed from The Sovereign Speculator: http://sovereignspeculator.com
URL to article: http://sovereignspeculator.com/2008/09/17/90-day-t-bill-rate-drops-to-023-whats-next-negative-yields/
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[1] Bloomberg: http://www.bloomberg.com/apps/news?pid=20601087&sid=a4.1L80t2LxA&refer=home
[2] Image: http://sovereignspeculator.com/wp-content/uploads/2008/09/screenhunter_01-sep-17-0842.gif
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