View Full Version : Zero Hedge: T-Bill Yields Turn Negative: Possible market crash ahead?

21st November 2009, 11:08
I am a silver bull long term.

Unfortunately, the commerical real estate bankruptcies have started to make me wonder if there will be another PM/market crash like in 2008.
The T-Bill going negative has my eyes bugging out of my head. How can this happen with all the money printing that has been done? I guess we didn't print ENOUGH FRNs...

The same guys that broke the story on Goldman's front-running the market (HFT) and provided proof that the FED lied when they said they won't monetize the debt (POMO),
now say that some very interesting things happened Thursday & Friday:

1) T-Bill yields turned negative (you PAY the Fed to buy their debt, instead of earning interest from it).
2) The dollar index had a weird spike up to 82 before coming back down.
3) The HouseFinCmte defied the FED and Barney Frank and passed Paul/Grayson amendment to the AuditFED bill to undo the Watt attempt to water it down to nothing. (good news)

This article focuses on the T-Bills turning negative.
When did this happen before? Oh, yeah, right after Lehman Bros collapsed and PM/equities tanked. What happened to PMs then? They got spanked, but eventually recovered. Will it happen again? That is for you to decide. I have decided to ride out this potential downturn, because I don't think the PM fall will go as deep or last as long as in 2008. If I can just ride it out, I think I won't regret it.
And, right after a potential 2009 market crash, the USGovt will start Stimulus/QuantEasting/Bailouts 2.0, which will flood the market with more FRNs that have to go somewhere. At that point, PMs will really start going up.

So, all you silverbugs. Buckle up. It going to be a bumpy ride...

"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."

One comment below was:
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!"


21st November 2009, 12:11
Wouldn't it be nice if just once this quarter the market responded rationally to an event... as it now stands , if we get a classic response to this event.. I'll probably have to go change my panties.

22nd November 2009, 11:57
I used to say that the market isn't just irrational, it is outright insane. However, it is obvious that all the liquidity created in the last year has to go somewhere and it might as well be stocks. If you don't own publicly-traded stocks then it doesn't matter.