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.