In late March yields on both the 1-month and 3-month U.S. Treasury Bills entered negative territory – the first time in almost 5 years that this has happened. In addition, CNBC reported that while the Coronavirus pandemic has brought negative yields on government debt, they are not directly related to central bank policy. They say Fed officials have rejected the notion that the U.S. central bank might eventually take its policy rate below zero. Indeed….
“This is part and parcel of the whole flight to quality thing,” said Kim Rupert, managing director of global fixed income at Action Economics. “They’re obviously the most liquid instrument. We saw a lot of selling pressure a few days ago when everyone was selling everything to get cash. But with all the plans the Fed has introduced, the bill market is much safer.”