“Where the credit markets are trading, it’s all but implying a 1929 scenario,”

[RedEarth]

Three month Treasury bills, according to Bloomberg, yield something like 2 basis point.



Treasury yields aren’t hard to calculate. But they are still my favorite indicators of the scale of the current crisis. The fact that so many are willing to lend so much to the US Treasury for so little is a clear indicator of a lack of confidence in other financial asset. Dr. Krugman is right. Market analysts are more or less saying the same thing: ““Where the credit markets are trading, it’s all but implying a 1929 scenario,” said Joe Balestrino, fixed income strategist at Federated Investors”

I can not match John Jansen’s market experience — but I share his amazement at the scale of the moves in the Treasury market today. Jansen:

The Long Bond is trading at a yield of 3.43 percent and the dollar price has exploded 9 points today. I have done this for nearly 30 years. I have never witnessed this before.

http://blogs.cfr.org/setser/2008/11/20/not-a-good-sign-the-treasury-once-again-can-borrow-for-free/