Wednesday, November 26, 2008
You don't see this happen everyday. Actually, you dont' see this happen ever. Earlier today, the yield on the ten-year U.S. Treasury dipped below three percent for the first time ever.
Investors are so terrified of what they see all around them that they've bid up the price of super-safe U.S. debt to levels that will only pay them 3 percent per year for the next 10 years.
[Note: The term "super-safe" as used above implies that you'll be sure to get your money back after ten years, but there's no telling what (if anything) that money will buy.]
Sure, there were a bevy of bad economic reports again today - durable goods orders plunged, new home sales tanked, jobless claims remained firmly in recession territory, and there is nothing to be thankful for in the manufacturing sector - but it's not the end of the world.
In the entire 46-year history of the 10-year note, the yield has never been lower.
Now might be a good time to get into one of those short-Treasury funds like they have over at Rydex and ProShares.
The only way that Treasury yields can go any lower than they are now is if investors become even more terrified than they already are and that just doesn't seem possible.