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.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.