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UPDATE 1-U.S. 3M bill yield posts fresh 50-plus year lows
March 19, 2008 / 6:59 PM / 10 years ago

UPDATE 1-U.S. 3M bill yield posts fresh 50-plus year lows

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By Richard Leong

NEW YORK, March 19 (Reuters) - The yield on U.S. 3-month Treasury bills reached fresh 50-plus year lows on Wednesday, as investors booked profits on stocks and commodities and put the proceeds into ultra-safe assets.

The three-month T-bill yield US3MT=RR, considered by economists as a benchmark of “risk-free” return on U.S. assets, reached as low as 0.56 percent, down 29 basis points from late Tuesday.

“It is the absolute flight to safety,” said Bryan Taylor, chief economist with Global Financial Data in Los Angeles.

“People are just scared that non-government debt is risky,” said Taylor, whose data shows the 3-month T-bill yield has not been this low since 1947.

Investors decided to take profits on stocks after the Standard & Poor's 500 index .SPX made its biggest one-day jump in more than five years on Tuesday, when the Federal Reserve lowered key U.S. interest rates by 75 basis points.

In midafternoon trading, major U.S. stock indexes .DJI .SPX .IXIC were down as much as 1.4 percent.

Even the booming commodity sector was not immune to the day’s flight from risky assets.

Gold fell to a three-week low, losing nearly 6 percent below $1,000 an ounce. Oil prices CLc1 were off more than 5.5 percent at $104 a barrel.

“A lot of commodity funds seem to be going into T-bills,” said Janaki Rao, an interest rate strategy at Morgan Stanley in New York.

Other bill yields also traded lower on this flight to safety. The yield on 1-month Treasury bills US1MT=RR last traded at 0.54 percent, down 3 basis points from late Tuesday.

Six-month bill yield US6MT=RR last traded at 1.22 percent, compared with 1.33 percent late on Tuesday.

Additional reporting by John Parry, Editing by Chizu Nomiyama

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