Administration Brings Back One-Year Treasury Bill

Since 2001, we’ve had to do without the one-year treasury bill. The government was enjoying a nice surplus, so the need to raise money through the sale of treasury bills was not a high priority. As you know, times have changed. The surplus is gone, and we’re faced with a staggering budget deficit, and one way to try and bring in some extra cash is by auctioning off more treasury securities.

The first one-year, or 52-week treasury bills will be auctioned in June, and then subsequent auctions every four weeks. The return of the one-year security was announced as officials reported the government’s borrowing needs for the current quarter, which will include separate auctions next week to raise $15 billion with the sale of 10-year Treasury notes and $6 billion in the sale of 30-year Treasury bonds.

What This Means for You

In most cases, nothing. With rates so low, there is very little reason for the average person to consider T-Bills of any maturity. Why settle for a yield under 2% when you can earn more in a savings account or a one-year CD? That isn’t to say they don’t have their place, but for most of us, the reintroduction of the one-year treasury bill is hardly news. It certainly may help the government raise more short-term money, but let the big boys play that game.

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Filed Under: Economy

About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.

1 comments
David
David

Why don't they just sell more 10 and 30 year treasuries. Makes you wonder what the federal government is thinking about future interest rates.

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