WASHINGTON — The demand for Treasury securities — investments where the investor lends money to the federal government — has become so frenzied that yields have fallen to minuscule levels. At one point this week, the interest rate on one such investment even hit zero.
Zero. As in the rate of return you’d get if you locked a stack of 20s in your basement.
Q: Who would be dumb enough to buy Treasury debt bearing such low rates?
A: Plenty of people. The demand for four-week bills at Tuesday’s auction was so high, the government could have sold four times as much as the $30 billion in debt that it did sell.
Q: Why would investors be behaving in this manner?
A: One word: fear. The financial crisis has cost investors trillions on other investments.
Q: How much of a stake do foreign governments control in Treasury securities?
A: About half of the nation’s $5.3 trillion in publicly traded debt is held by foreign nations, with China recently passing Japan as the country with the largest holdings. They do so because U.S. government bonds are still viewed as the safest investments in the world.
