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Who said negative interest rates were impossible?

Bloomberg is reporting that yesterday the US Treasury sold $27bn of 3-month Treasury Bills at a discount rate of 0.005%, the lowest since the first auction in 1929, and today sold $30bn of 4-week bills at 0%, again the lowest rate ever since the first sale of 4-week bills in 2001.

The price of the 3-month bills rose today to 100.002556, to give a negative discount rate of 0.01%.

$1m invested in 3-month bills at today’s price would result in a loss of $25.56 if held to maturity at par.

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It’s not often we feel sorry for lenders but spare a thought for Nationwide and Halifax. They found themselves stuck between a rock and a hard place over collars last week.

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