Weeks and Months of Negative Treasury Bill Yields Are Coming
- ‘Pretty big’ supply-demand mismatch, Pimco’s Schneider says
- Rates on repurchase agreements are also flirting with zero
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The distortions in U.S. money-market rates have begun, and they’re only going to become more acute.
Yields on Treasury bills are flirting with zero as the government removes supply, with securities maturing next week already trading at negative levels in the secondary market. Yet there’s still $4.3 trillion in money markets -- with about 85% in government funds that primarily invest in assets like T-bills and repurchase agreements -- searching for investments, according to Jerome Schneider, head of short-term portfolio management and funding at Pacific Investment Management Co.