The novel coronavirus keeps hitting the U.S. with “firsts.”
For this week’s newest “first,” the yields on both the 1-month and 3-month Treasury bills dropped below zero. This is the first time in 4 and a half years that U.S. financial markets have experienced a negative yield on government debt.
“Negative yields are largely a function of demand, as prices and yields move in the opposite direction for bonds. Investors pay a large premium above par on the bonds and can receive less than their initial investment at maturity. Deposit rates also can be negative.“