Government Auctions 4-Week Bills With Zero Yield

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The U.S. government auctioned a batch of short-term treasury bonds with no yield on Tuesday, with the sale still getting a huge amount of interest from investors.

The results of the auction are the latest manifestation of fear stirred up by the current financial crisis, as investors would rather park their money in safe government-backed bonds for no return, rather than risk losing money elsewhere.

The U.S. Treasury Department revealed that it sold $30 billion of the 4-week bills, with the auction receiving a yield of zero percent. The bid-to-cover ratio, a measure of demand for the securities, came in at 4.20.

A bid-to-cover ratio describes the amount of bids the government receives for each dollar worth of securities that it is selling. The higher the number, the higher the demand for the bonds.

The issue date for the treasuries is December 11, with a maturity date of January 8.

With a lot of money managers trying to hold steady until the end of an extremely volatile year, putting money in a safe place until January may have appealed to many people, even if they will receive no return on their investment.

The 4-week bill is the shortest-term security that the Treasury Department. Auctions of longer-term securities earlier in the week received less interest from investors.

On Monday, the U.S. Treasury Department announced Monday that it auctioned $27 billion of 26-week bills, which drew a stop-out rate of 0.300 percent and a bid-to-cover ratio of 2.63. An auction of $27 billion of 13-week bills drew a stop-out rate of 0.005 percent and a bid-to-cover ratio of 3.33.

Last week, the government sold $36 billion worth of 4-week bills. That auction received a stop-out rate of 0.040 percent and a bid-to-cover ratio of 3.16.

Later this week, the government will auction $16 billion of 9-year, 11-month notes.

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