Post-Lehman Deja Vu As T-Bill Yields Turn Negative

Tyler Durden's picture

The last time Bill yields turned negative (in essence investors paying the Government to hold their money for them) was in the days after the Lehman bankruptcy, when the entire world was about to blow up. So why did Bill yield for January maturity just turn negative once again? In other words, why are investors suddenly running for the hills? As Dow Jones reports, January and February bills hit a yield of -0.03% earlier. Some explanations have to do with Bill scarcity, as nobody wants to be exposed to anything beyond 3 months down the curve, let alone 1 year. However, the fact that bond investors may not be buying into the whole recovery BS (or just realize that there is nobody willing to roll near-dated treasurys into longer-tenor pieces of paper) and are once again running scared and willing to pay Ben Bernanke to hold their money for them should be very, very troubling. Additionally, could there be something more pressing and/or catalytic? We have not heard peep from any of the big banks in a while...

Even more surprisingly, the 1-3 month bill curve has also gone negative, indicating that there is something veru much awry with demand along the Treasury curve.

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SayTabserb's picture

It's quiet out there. Too quiet...

loans's picture

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Naimad's picture

If the attach is going too well, you are walking into an ambush! A Military Wisdom

SampsonHelix's picture

Turn negative means something bad happens. We should do some actions to turn back to the positive way.

Mad Max's picture

And gold is slightly up, silver is neutral vs. yesterday, and the USD index looks like the back of a Stegosaurus... "interesting times" I guess.  How weird do things get during a "crack-up boom"?

D.O.D.'s picture

Take a look at Nov.20 '08 SPY volume, then look at today's...

Anonymous's picture

Where can I see intraday volumes that far back?

D.O.D.'s picture

It was over 800mil, today was a hair over 150mil...

SWRichmond's picture

Gold going persistently up, no matter what else is happening, is not a happy market indicator (except for GG!).

bugs_'s picture

Big Friday plans Sheila?

Tommy's picture

Isn't Black Friday the ultimate Friday news dump?

Add to that Geitner's contentious hearings today on Capital Hill and something must be going on behind the scenes.

Apocalypse Now's picture

Nice insight Tommy, with the media pretty much covering up all the problems on the home front with a recovery story, I don't think the populace is exerting all the pressure.

It's possible we received an ultimatum from China on the Presidential visit, or something else is going on behind closed doors to create internal pressure (knowledge of a further negative outlook on the economy, imminent collapse, or the bank situation).  The only bright side is that if it was all truly over, asking him to step down would most likely be pointless - unless just to shame.

deadhead's picture

I still find Obama's "double dip recession" comment yesterday absolutely remarkable yet it has not been discussed.  Just the mere fact that he used those very 3 words after all the efforts to date has me scratching my head a bit.......


was he telling the truth in a CYA moment?

was he indirectly telling the chinese that we will have to keep spending more $$ cuz we are pretty much phucked and can't hide it anymore?  and they have no choice but to go along?

yes, i know it is clearly a setup for stimulus version whatever.

FreeStateYank's picture

I've been wondering the same thing. A couple of things to ponder:


1. Obama suggests getting into stocks after the second crash. Markets go up.

2. Obama states a couple of weeks ago he's 'all in cash.' Foreshadowing?

3. Obama talks about 'chance of a double dip recession'. Markets promptly begin to tank.

4. Obama when he talked about getting into stocks referred to P/E as 'Profit/Earnings' ratio- proving he is indeed a talking puppet and economic idiot.

So... who is the puppet-master?

At a time when the Fed and our country in general needs to restore faith in:

A) Financial institutions

B) The Fed

C) Elected officials

D) Gov't competence

Obama's comment seems designed to provoke subtle chaos in the markets? More Cloward-Piven?


Apocalypse Now's picture

Where did you hear the 'all in cash' comment, what's the context?

That would be interesting if I had a source.

Deficient Market's picture

It's madness. It's madness, I tell you!

- Everybody is willing to pay anybody to hold their cash, whether it's equities (even bankrupt ones), treasuries, bonds, commodities, anything as long as it's not the dollar!

- Timmay's in the oven

- Obama giving lip service to everyone

- Bernanke sleeping well at night

chet's picture

Oh, what did you see, my blue-eyed son?
Oh, what did you see, my darling young one?
I saw a newborn baby with wild wolves all around it
I saw a highway of diamonds with nobody on it,
I saw a black branch with blood that kept drippin',
I saw a room full of men with their hammers a-bleedin',
I saw a white ladder all covered with water,
I saw ten thousand talkers whose tongues were all broken,
I saw guns and sharp swords in the hands of young children,
And it's a hard, and it's a hard, it's a hard, it's a hard,
And it's a hard rain's a-gonna fall.

deadhead's picture

you ought to hear Bob Weir do this song.....incredibly awesome!


Indeed, a Hard Rain's Gonna Fall.


Maximilien Robespierre's picture

I'll take El Paso @ Red Rocks.

Stevm30's picture

Great song... and appropriate.

Rusty_Shackleford's picture

Dylan songs are even better when you don't have to listen to him sing them.

Best version I've come across of this classic.

Anonymous's picture

Nice version, but nothing beats the original from the master himself.

SteveNYC's picture

T-Bills yielding negative, S&P trading at 100x PE plus.......

.....something not right here, not right at all.

Where are those "bubbles" that the Fed recently stated that it does not see? In stocks or be the judge! I know where my money is at.

Ragnarok's picture

I saw him deliver that line with a straight face yesterday.  Breaks my heart we live in such a world.

Flyingtrader's picture

Ummmm...isn't S&P closer to 16x PE?  What chart are you looking at?


phaesed's picture



This is what caused the Japanese sell off!

This is what caused our sell off!

This is the watershed signal events.... this destroys quant models

INTEREST CANNOT BE NEGATIVE..... When it becomes negative in real terms, forget about it. Somewhere, someone just went bankrupt!




SWRichmond's picture

If you're going to panic, panic first.

phaesed's picture


Panic? Hell, this is what preceeds deflation in every case I've found as of yet.


This is what I was looking for on a theoretical basis.... I want to see if it pops

SWRichmond's picture

I was referring to a market panic, not a phaesed panic.

I will now retire to my kitchen, pop some popcorn, and watch to see if the waterfall fits through the garden hose.

Deficient Market's picture

Not sure there will be a waterfall from this. The question is: If no one seems to care for fundamentals anymore, and the theory that in a stable system rates should never be negative is a type of fundamental aspect of a well functioning market - then is this really an event preceding anything of any significance or yet another blip on the screen?

phaesed's picture

There should be, that might be part of the reason why issuance just went up 2 billion today

And maybe why Tiny Tim was getting so pissed because he knew his chance for good public opinion just passed.

Also the Fed wants to destroy any legislation against it... another crisis would do that theoretically.

Are there no other mathematical economists out there on this blog who aren't keynesians??? *SIGH*


Deficient Market's picture

That's definitely true about the fed, nothing will serve better to put everyone back under his umbrella than another collapse. Also probably better for the GS guys as well, as they can make a lot more money with little resources on another big leg down vs spending increasingly larger amounts to move the market less and less up. So in short, all the big guys win from another collapse.

Only question is when will they decide to pull the switch?

Roy Batty's picture

As a graduate of Chicago GSB, the last year and a half has been absolute torture.  The entire obsession with Keynesian theory and the failure of the practice has been very frustrating.  Perhaps some good will come from this disaster.....

phaesed's picture

I believe we will Batty... we have an entire generation of the most intelligent individuals out there expanding their knowledge on a daily basis. Places like Zero Hedge, Chris Martensen, and the Mises Institute are advancing the theory, they just need to advocate the mathematical schools that have alternative approaches. Indeed, a return to the principles which Fisher himself created would do much to advance our knowledge. Theoretical economics will be reworked, question is if it will be that much better.

I'm serious, I don't want to be one of the few who aren't a part of the bought and paid for academic community. Read these principles... I especially advocate reading W.S. Jevons "The Theory of Political Economy"




cougar_w's picture

You are correct, there are no events.

There are only gears.

Someone is about to turn the crank. The gears are going to turn as they were connected to do over the last 50 years. No, over 150 years. There will be no event, there will only be motion. It will be as smooth, fluid and flawless as sexual intercourse. Everything will fit together, and the gears will turn in breathless beauty and grand majesty.

And not a single soul alive will understand what the gears are doing, and the gears will then unwind us completely.

If it was an event we could stop it. But it is a machine and we are inside it and it will grind us into sausage.

Probably. Though I hope not. I really really do.


Deficient Market's picture

I really like that imagery, it is true that there have been a very large number of gears going into this machine and the crank had turned last year, but then as expected the government threw a log into the gears in March. We'll see how many more gears or force on the crank will finally make that log break. And I'm in the same boat, I really wish we weren't headed for that ledge, but wishing it away does not mean we shouldn't look for it.

delacroix's picture

you are so twisted. I like it

Fish Gone Bad's picture

Cougar, your writing is erotic.

WaterWings's picture


Like in Atlas Shrugged? Maybe supermarket paperbacks with Fabio on the front? Or back-alley style. Yeah.

deadhead's picture

"If no one seems to care for fundamentals anymore..."

With respect, I believe this is a faulty postulation.

There are many, dare I say the vast majority, who care about fundamentals.  Fundamentals are certainly put aside from time to time (see behavioral economic theory vs. efficient market) and at other times they are not.


Anonymous's picture

This is not my beautiful house.

This is not my beautiful wife.

Oh, wait. Wrong board.

phaesed's picture

Seriously, does anyone have a link?? I'd like to read the release

lizzy36's picture

and yet we got the 3:00 pump, soon followed by the 3:45pm pump

nasdq 20pts above its LOD.  and dj cut it's losses in half. 



deadhead's picture

with comments like these it is going to be tough to protect you lizzy when we invade Canada...

geminiRX's picture

With some states threatening to leave the federation, there won't be much of a US to invade Canada. You will likely be fighting each other for

Anonymous's picture

timmy and friends selling over $120 billion in treasury notes in 3 days during the upcoming holiday-shortened week.

i think they are hoping everyone will go away for thanksgiving and look the other direction when that auction takes place.

Anonymous's picture

If this is truly as significant as stated it deserves a larger explanation