The United States sold debt notes at zero percent. These short term notes would provide a low yield to investors. That is to say that they would obtain no yield for investing in these short term debt financial instruments. An event like this took place during March 2020, ever since the initial and official acknowledgement of the pandemic by the Trump Administration.
The Treasury Issues $40 Billion Worth Of Debt At Very Low Rates
It is essential to be aware about these notes ranging from zero percent to zero point one percent because it indicates several aspects about market sentiment. It may show that investor appetite for risk-off assets, traditionally, these were or are bond assets, seem to be on the rise.
Investors had a similar appetite at the start of the pandemic when they thought that the skies were falling due to the pandemic. Investors switched from stocks to money market funds and cash or cash alternatives in the face of risk.
At the same time, this is not as beneficial to investors as they obtain minimal yield on their government debt investments. As the costs of living continue to rise and inflation shows up in commodities and input goods, it creates more pressures on consumers.
Meanwhile, the government is looking to minimize its large cash balance to continue to operate.
This recent issuance is a boon for the government as it allows it to borrow money at very low interest rates and fund its operations.
Investor Sentiment in April 2021
The recent purchases shows that there might be a shift in sentiment from from risk-on to risk-off. At the current moment, bitcoin still remains at relatively high valuations as it seems to bouncing back to its past high. The bitcoin price is at $56, 927.40.
The S&P is 4,183.30. It is up from 3,972.80 over the course of a month and up from 3,310 over six months to its current level.
This is to say that the large investor sentiment remains bullish and strong as risk assets such as stocks, cryptocurrencies, and other asset classes are still receiving bids.
There are small signs of fear in the market while general asset prices across the board remain at highly inflated levels. At the same time, there has been volatility over recent tax proposals made by the current President Joe Biden and his advisors.