Yields on Short Term Treasuries

While the stock market continues its “recovery rally,” there’s something strange going on in the bland world of bonds. Check it out:

True, there’s hardly a difference to the everyday investor between a 0.3% and a 0.04% yield. After fees and inflation, you’ll end up losing money either way.

But it’s worth noting that short-term Treasuries are at their highest demand since it hit the fan this time last year. In fact, the Treasury auctioned off $31 billion in 6-month bills yesterday at 0.14%, the lowest level ever. Ditto with their auction of 2-year notes later in the day.

In other words, the majority of the market can’t find anything better to do with cash than stuff it away at a near-negative yield for a few months… not the best sign for stocks. With the holiday lull and tax-selling season right around the corner, it’s hard to blame them.