Short-term Treasury yields just turned negative for the first time in 4.5 years amid the coronavirus pandemic
- Yields on the one- and three-month US Treasury bills fell below zero on Wednesday.
- Investors have been rushing into bonds amid the coronavirus pandemic, sending yields to record lows.
- Japan, Germany, Denmark, France, and Sweden have had negative-yielding government debt for some time.
- Read more on Business Insider.
Negative yields on government debt have landed in the US.
On Wednesday, yields on both the one-month and three-month US Treasury bills fell below zero, joining a slew of government debt around the world with yields in negative territory. It was the first time both bills went negative at the same time since their yields briefly fell to -0.002% each four-and-a-half years ago, CNBC reported.
The slump in short-term Treasury yields comes amid the coronavirus pandemic, which has sent panicked investors flocking to safe-haven assets and out of riskier investments such as stocks. As investors pile into Treasuries, yields have plunged as they are inversely related to price.
Countries such as Japan, Germany, Denmark, France, and Sweden have had negative-yielding government debt for some time. Investors buying negative-yielding debt could eventually recoup less on the investment than they initially paid.
The coronavirus pandemic has roiled markets lately and prompted unprecedented action from the Federal Reserve and US government. Last week, the Fed slashed interest rates to near zero, and this week launched a number of programs to smooth markets in turmoil as well as help businesses and borrowers. In the early hours of Wednesday morning, Congress agreed on a $2 trillion fiscal stimulus package to bolster the US economy amid the coronavirus outbreak.
Negative-yielding debt is not the same as negative interest rates - something that President Trump has repeatedly called for. Still, the Fed has indicated that negative interest rates are not on the table any time soon.
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