The sale of Treasury Bills is rarely newsworthy, given that it's the one market where the notion of buying and selling "action" really doesn't fit (Treasuries are the original widows & orphans fund, after all).
But, Treasuries made big news today, even if the news stories themselves didn't exactly get it right. The nation's largest financial newspaper ran a headline which said "T-Bill Yields Fall to Historical Lows," when in truth the yield on three-month Treasuries actually fell BELOW ZERO during some of the trading session. That literally means lenders were paying the borrower to hold the money.
And who, exactly, was crazy enough to purchase securities with a yield of zero (or less)? Umm, I don't have any names, but that's really the wrong question. The better one to ask is: Was the $32 billion supply of ZERO-YIELD securities available at today's Treasury auction enough to meet the demand?
Well, I think the answer is "no"...
...Since the bids for that supply amounted to $126 billion.
Now, one could say that news stories about this were trying to describe the indescribable, and perhaps that's true. Yet I am aware of a certain word that would at least help to offer a fitting description, although this word was absent in all four news accounts that I read. I'll put it in rhetorical terms:
If accepting zero yields just to get back your principal isn't deflation, then I don't know what is.
That's right. In a deflationary environment, cash is king -- even (or especially) when the media fails to see this simple fact. When traditional investment vehicles are losing value, it's not hard to conclude you're better off than a lot of other folks just by getting back your principal.
Deflation isn't theoretical any longer -- and on a day when yields fall below zero, I'd say that phrases like "creeping threat" don't reflect how real the risk truly is. It's here. Now.