US Short term interest rates turn negative

US Short term interest rates turned negative Thursday as banks stockpiled government securities in order to polish their balance sheets for the end of the year. The growing appetite for short-term government debt reflects an effort by banks to present pristine year-end balance sheets to regulators and investors, a practice known as “window dressing” on Wall Street. With the US Federal Reserve maintaining an overnight target rate of zero to 0.25%, investors are demonstrating a willingness to completely forgo interest income, or even to take a small loss, to own securities that are seen as safe. This action has been exacerbated by the fact that all leading US banks, many sitting on big trading profits, will this year close their books at the same time, at the end of December. In past years, investment banks such as Goldman Sachs and Morgan Stanley reported annual results in November. Late Thursday, US T-bills maturing in January traded below zero %, traders said. Three month T-bills traded at 1 bp and six-month T-bills fell to a record low of 13 bp, compared with 14bp at the height of the crisis last year. Read more
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Paul A. Ebeling, Jr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices for the Stock Preacher. His report is a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world. Ebeling has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
