“Short-Term Treasury Yields Could Go Negative. Here’s What That Means for Investors.”
February 17, 2021
“Yields on some Treasury bills—short-term securities that mature in a year or less—could temporarily turn negative because of a coming supply crunch, experts say. While they won’t be auctioned by the U.S. at rates below zero, as auction rules prevent that, bills could trade at negative yields in secondary markets…
Put simply, the implication for investors is this: Large institutions will have fewer places to park their cash short term, and that will weigh down short-term yields across financial markets unless, or until, policy makers act… The crunch in short-term yields leaves investors with even fewer options, as stocks trade at record highs and high valuations, and as long-dated government and corporate bonds face higher risk of paper losses with long-term Treasury yields rising…”