Breaking News: Supreme Court Justice Antonin Scalia dies during hunting trip in Texas

U.S. Treasury borrows $20 billion for free

May 8, 2013 at 12:56 PM
| License Photo

WASHINGTON, May 8 (UPI) -- Demand for relatively safe four-week Treasury bills pushed yield rates down to zero for the U.S. Treasury.

There was $5.42 in bids on the dollar, as the Treasury sold $20 billion in four-week notes. That meant for the first time in almost a year and a half, the Treasury was borrowing money on the bond market for free.

With tax revenues near their seasonal peak, the Treasury was able to sell less than half of the $85 billion in T-bills it sold in an April auction, The Wall Street Journal reported.

Banks buy T-bills because they are so safe they keep overall investment risks in balance.

After making a few risky market bets, banks tend to turn to safer bets, like T-bills, like someone at a racetrack that makes a relatively safe bet to cover a few bets made on long shots.

With bond prices determined by supply and demand, and yields inversely influenced by price, the Treasury was able to borrow at zero costs having announced recently that it would pay down $35 billion in debt in the second quarter of the year. With less government debt in supply and demand strong, yields drop.

Related UPI Stories
Latest Headlines
Trending Stories
Ted Cruz campaign pulls ad featuring softcore porn actress
Report: Clinton Foundation subpoenaed by State Dept. watchdog over charity projects
Ruby Rose, Gigi Hadid react to Kanye West's lyric about Taylor Swift
Kristen Wiig impersonates Peyton Manning on 'The Tonight Show'
NYC police officer found guilty of manslaughter in Brooklyn stairway shooting