Like I said, anyone long Bonds made over 18% last year. No one is locking in 3%. They can sell today and realize that gain.
Lots of creative ways to scratch out yield - private placements are a big one for starters. Could also throw in some corp's and muni's along with a dash of swaps to stretch some maturities out and they can get through. Also, they should be matching assets to liabilities as new business comes in (both duration and cash flows) so they should be holding a variety of asset types, durations, and yields accordingly. The big shock is over now and one would assume that they have updated their interest rate risk modelling to account for the new rate environment going forward (for those that survived and minimized exposure to mbs, cdo, cds, etc...)
If you have large amounts of money you are not insured by the FDIC. Buying UST bonds is a way to protect your money
Actually, if you have reasonably large amounts of money with a custodian (e.g. BONY or State St), you can place it in FDIC-insured accounts. It will cost you, however.
4-Week Treasury Bill Auction Results and Additional Auction Statistics Term: 4-Week High Rate: 0.000% Investment Rate*: 0.000% Price: $100.000000 Allotted at High: 54.35% Total Tendered: $162,543,466,100 Total Accepted: $32,423,039,300 Issue Date: 01/05/2012 Maturity Date: 02/02/2012
This is pure zilch. Tbills trading at zero discount; no reason for anyone to buy them but people apparently still bought them. Really? why would they do that? -gariki
I don't think investors are being at all rational, but since the Fed is printing money like this, our debt payments have never been cheaper with rates going down in all terms the FDIC is the cause for not covering everything the banks when that would have created more stability than handing $16 trillion to too-big-to-fail banks that lost an extraordinary amount of money they gave to the taxpayer, averting certain economic disaster equivalent to destroying devestating GDP growth of -120%.