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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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From: Sr K	3/26/2009 11:49:12 AM
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U.S. One-Month Bill Rate Negative for First Time Since December By Dakin Campbell March 26 (Bloomberg) -- Treasury one-month bill rates turned negative for the first time since December as investors sought the most easily-traded securities reduce risk from balance sheets at the end of the quarter. Banks earn interest in funds deposited with the Federal Reserve. At quarter end, banks prefer to carry securities on their balance sheets instead of cash, driving demand for bills, according to Donald Galante, chief investment officer and senior vice president of fixed income at MF Global Ltd. in New York. He expects rates to rise again by mid-April. “We’re in a funds rate range of between zero and 0.25 percent,” said David Glocke, who manages $65 billion of Treasuries at Vanguard Group Inc. in Valley Forge, Pennsylvania. “If you keep rates this low, you’re going to end up having periods, especially in the Treasury bill market, where the yield goes negative.” The rate on the one-month bill was negative 0.0152 percent in New York, compared with 0.03 percent yesterday. It was last negative on Dec. 26.

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