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.
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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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+.