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The Real Reason For ZIRP——–$1.17 Trillion Of Zero Yield Treasury Bills
davidstockmanscontracorner.com / By MIN ZENG at The Wall Street Journal /
The pile of Treasury bills sold at an interest rate of zero since the financial crisis topped $1 trillion this summer and grew further this week, with auctions for three-month bills on Tuesday and one-month bills on Wednesday that each carried no yield.
On its surface, it makes no sense for investors to lend their cash for free. But with interest rates stuck near zero and supply limited by the looming U.S. debt ceiling, investors who need a place to park their cash have few other options.
“It is absolutely weird,’’ said Thomas Simons, vice president and money market economist in the fixed-income group at Jefferies LLC. “This is the world we are living in.”
Treasury bills have maturities ranging from a few weeks to a year. The government uses them to meet its short-term financing needs. Buyers like corporations use bills as a safe place to stash money that they don’t want to tie down for longer periods, and tighter regulations after the financial crisis have boosted demand for bills among money-market funds and banks.
This year, they have been fighting over a shrinking pool. The volume of Treasury bills outstanding fell to $1.36 trillion at the end of September from $1.457 trillion at the end of 2014, headed for the lowest annual level since 2007, according to data from the Treasury.
The post The Real Reason For ZIRP——–$1.17 Trillion Of Zero Yield Treasury Bills appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/10/15/the-real-reason-for-zirp-1-17-trillion-of-zero-yield-treasury-bills/
