On this blog, I often try to explain or show things which may not be obvious to others. It’s what I love. But, I’m not all knowing! Sometimes, I run into things I can’t quite get my head around.
In this case, it is that many people/entities by short term US bonds, by “short term”, I mean 3 and 6 month bonds. I don’t know why anyone would! Consider this article ….
WASHINGTON (AP) — Interest rates on short-term Treasury bills rose in Monday’s auction to the highest levels this year.
The Treasury Department auctioned $24 billion in three-month bills at a discount rate of 0.050 percent, up from 0.030 percent last week. Another $24 billion in six-month bills was auctioned at a discount rate of 0.145 percent, up from 0.135 percent last week.
The three-month rate was the highest since three-month bills averaged 0.055 percent on Dec. 22. The six-month rate was the highest since these bills averaged 0.155 percent, also on Dec. 22 of last year.
The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,998.74, while a six-month bill sold for $9,992.67. That would equal an annualized rate of 0.051 percent for the three-month bills and 0.148 percent for the six-month bills.
Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.33 percent last week from 0.28 percent the previous week.
I simply don’t understand this. It’s not sane. Not only is inflation kicking it’s azz, it isn’t worth the time, not as an individual, not as a company, nor some other central bank. I presume companies and central banks have to pay someone to do such transactions.
Sure, there’s the exchange rate game (Mrs. Suyts thought that to be an explanation), but, that’s awful risky. And, besides, people have been buying them long before the rise of the US Dollar vs other currencies.
So, why does this happen?