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  • September 17, 2008 09:13 AM EDT by Brian Sullivan

    Key to Today: Watch Money Funds and T-Bills

    The big story today likely to be the money fund and Treasury bill (T-bill) market.   The T-bill market has gotten expensive it's because being viewed as the last safe haven.   Now it can cost you more than $1 to buy a $1 T-bill.    Its also the reason that the 10-year Treasury yield has dropped so rapidly recently.   These are being viewed as the "sock drawer" for institutional billions.

    T-bill rates have dropped to their lowest level since 1954!  Demand was so high that today the Fed announced a new $40 billion dollar t-bill facility to help add supply.   They literally 'sold out' of T-bills.

    It follows on my previous story about the "breaking of the buck."    If money funds are viewed as risky because of exposure to bad debt, there are fewer drawers to hide the money in save for T-bills and Treasuries.   And now T-bills are taking hits.

    If money flows out of money funds today--as I am hearing from many institutional sources--Treasuries will soar again and yields could easily fall below 3%.

    Be careful not to mix up money market accounts - deposits at your local bank that are FDIC insured - and money market mutual funds, AKA money funds.   We are talking about the latter.   

    This is developing...more to come. Watch the show.  We are leading with it at top of the 10 a.m. ET hour.

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Douglas Johnston

Brian, You have been the one person that has been highlighting the real data point that has been responsible for keeping this market and financial situation under pressure. Wonderful work. Until Libor spreads revert back to "normalized" levels, TED spreads, CP, etc this market will continue to "spit into the wind". And as the money supply available to market participants (broker/dealers, hedge funds) gets smaller &/or more restricted the risk capital needed to maintain liquid, deep markets will continue to evaporate. -Doug ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PS we last spoke when you were at BB and I was at CanaccordAdams. Do you have contact info?

September 17, 2008 at 2:57 pm

Adele Fitzgerald

for Brian Sullivan, Heard you on the John Gambling show this morning and want to extend kudos to you, Brian, for calling these bailouts what they are, "socialism." We are nearing total government. What a shame that our elected reps don't give a hoot about the Constitution, a document they consistently trample - and today, ironically, is U. S. Constitution Day. Keep up the good reporting.

September 17, 2008 at 3:07 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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