Treasuries Melt Down, Junk Bonds Boom, Yield Spreads Collapse

Jon Blogosphere, Economy, Government, Market Commentary

The Hot Money returns, bets on Oil Nirvana. The costs of borrowing for the US government are jumping. On Monday, the US Treasury auctioned $34 billion of three-month bills at a discount rate of 0.53%, the highest since October 2008.
These short-term bills sell for less than face value and are redeemed at face value. The difference is the yield for investors. For a three-month bill with a face value of $10,000, the price was $9,986.60. Holding this bill for three months until redeemed will make investors $13.40 in yield. That’s an annualized rate of 0.538%.

This post was published at Wolf Street on Dec 13, 2016.