T-bonds at 0% why not just keep the money?

[Maverick74]

Quote from denner:

That is an important point...but more importantly I don't know of many people who are looking to lock in on a 30 year at 3% or whatever it was prior to the lift off. Most of the interest is on the short end and those rates are atrocious to say the least. [yeah sure it's wonderful for all those borrowing on depreciating housing].

Of course the byproduct is people will increase duration for that extra 100 basis points or whatever. No f'ing way they get a real return on those bonds even if we somehow just "inflate away" all of our debts via currency devaluation.

As bad as the late 70's were, at least if you had something saved you could get real returns, not this horseshit 0.05% garbage.

Like I said, anyone long Bonds made over 18% last year. No one is locking in 3%. They can sell today and realize that gain.

 

[dcvtss]

Quote from Froglet:

WTF is 0%?

There is no such thing as 0% interest on time. You might as well park it at a bank, or some CDs.

The reason why treasuries yield very little is because of the obvious. Liquidity is being pushed into this asset class. They yield more than a savings account, and most of all, they are liquid.

So the Saudi sovereign wealth fund should just mosy down to the local citibank huh?

 

[jo0477]

Quote from denner:

I would agree with it ONLY as an emergency measure with a very finite time horizon. Of course, I think that the skeptics amongst us knew that those "emergency measures" back in 2008 would turn into the status quo and I have no idea how the hell they can raise rates from this artificial zero interest rate policy to something ever marginally realistic.

We're probably just around the corner from more pension blow ups, insurance company bust outs, etc...Anybody else figured out where these guys are getting yield without getting their heads chopped off?

Lots of creative ways to scratch out yield - private placements are a big one for starters. Could also throw in some corp's and muni's along with a dash of swaps to stretch some maturities out and they can get through. Also, they should be matching assets to liabilities as new business comes in (both duration and cash flows) so they should be holding a variety of asset types, durations, and yields accordingly. The big shock is over now and one would assume that they have updated their interest rate risk modelling to account for the new rate environment going forward (for those that survived and minimized exposure to mbs, cdo, cds, etc...)

 

[Daal]

Quote from Archin:

Does this mean they expect all other equities to fall in value. Why lend money with no return, is their some advantage over holding it?

If you have large amounts of money you are not insured by the FDIC. Buying UST bonds is a way to protect your money

 

[athlonmank8]

The FED is making a killing aren't they?

 

[Martinghoul]

Quote from Daal:
If you have large amounts of money you are not insured by the FDIC. Buying UST bonds is a way to protect your money

Actually, if you have reasonably large amounts of money with a custodian (e.g. BONY or State St), you can place it in FDIC-insured accounts. It will cost you, however.

 

[GTS]

4-Week Treasury Bill Auction Results and Additional Auction Statistics

Term: 4-Week
High Rate: 0.000%
Investment Rate*: 0.000%
Price: $100.000000
Allotted at High: 54.35%
Total Tendered: $162,543,466,100
Total Accepted: $32,423,039,300
Issue Date: 01/05/2012
Maturity Date: 02/02/2012

 

[kcgoogler]

Quote from GTS:

4-Week Treasury Bill Auction Results and Additional Auction Statistics

Term: 4-Week
High Rate: 0.000%
Investment Rate*: 0.000%
Price: $100.000000
Allotted at High: 54.35%
Total Tendered: $162,543,466,100
Total Accepted: $32,423,039,300
Issue Date: 01/05/2012
Maturity Date: 02/02/2012

This is pure zilch. Tbills trading at zero discount; no reason for anyone to buy them but people apparently still bought them. Really? why would they do that?

-gariki

 

[GTS]

Quote from kcgoogler:

This is pure zilch. Tbills trading at zero discount; no reason for anyone to buy them but people apparently still bought them. Really? why would they do that?

Uh, didn't bother to read the thread, eh?

 

[bwolinsky]

Quote from GTS:

4-Week Treasury Bill Auction Results and Additional Auction Statistics

Term: 4-Week
High Rate: 0.000%
Investment Rate*: 0.000%
Price: $100.000000
Allotted at High: 54.35%
Total Tendered: $162,543,466,100
Total Accepted: $32,423,039,300
Issue Date: 01/05/2012
Maturity Date: 02/02/2012

I don't think investors are being at all rational, but since the Fed is printing money like this, our debt payments have never been cheaper with rates going down in all terms the FDIC is the cause for not covering everything the banks when that would have created more stability than handing $16 trillion to too-big-to-fail banks that lost an extraordinary amount of money they gave to the taxpayer, averting certain economic disaster equivalent to destroying devestating GDP growth of -120%.