IRX, 13-week US Treasury bill, at ~0.5% annual interest??

[WeedWhacker]

13-week US T-bill price (currently showing 5.0, or 0.5% annualized interest). A year ago, it was ten times that.

Apparently, folks are willing to essentially loan their money to the US government for free (or, if you count inflation, PAY the US a fee to hold their money) because they apparently don't believe they'll get a better deal from anyone else, aka get their money back.

[Azrael256]

Check out the deal with TIPS bonds lately.  Folks are buying them in the 105-range, hoping that inflation adjustment will make up for the *NEGATIVE EQUITY* they're buying at the current coupon.

[Paddy]

That Giant Sucking Sound" you hear are those foreign investments leaving the U.S.

[Manedwolf]

A lot of people have been making lousy small-investor decisions due to being fooled by hype.

APMEX had to shut down their website due to the volume of small investors purchasing small lots of precious metals...right before the price dropped. 

"But, but the commercial said gold was the best investment! I bought it at $1020 and now it's just dropped to $910! I lost money!"

[Headless Thompson Gunner]

Yeah, treasuries are doing some pretty wild stuff right now.  Short term yields are near zero and falling, mid term yields are rising, and long term yields are falling.  Doesn't that seem out of balance?  What's up with that? 

Best I can figure, there are a lot of people making decisions from their heart, not their brain.  Folks are afraid of stocks right now, and they're afraid of commercial bonds right now, and commodities don't look good either.  So they all flock to T-bills and bid the price way, way down, without stopping to look at what their bids do to the yields. Yields were down to 0.2% this morning for a brief spell.

I still don't grok why mid term yields are rising while short and long term yields are falling.  And doesn't it stand to reason that falling yields on long term debt imply that inflation is falling, not rising?  Or is it simply that long term bonds being bid up just like the T-bills?  But  then, why aren't mid-term notes being bid up, too?

Does anyone understand what's going on here?

[Headless Thompson Gunner]

That Giant Sucking Sound" you hear are those foreign investments leaving the U.S.

Care to square that with reality? 

Falling treasury yields imply that investors pouring money into U.S. treasuries.  It means that investors think US Government debt is a better investment than the alternatives, including domestic stocks, foreign stocks, commodities, foreign currencies, or whatever.  They think t-bills are a better investment even after factoring in the near-zero yields.

Have you been watching foreign stocks lately?  They're falling as much as American stocks, or more.  It could easily be that foreign investors are selling their foreign stocks to buy safer US treasuries.

[Azrael256]

It could easily be that foreign investors are selling their foreign stocks to buy safer US treasuries.

That has not been the case in recent treasury auctions.  But everything else is spot-on.  I believe the recent term for it is "flight to quality."