NEW YORK Dec 17 Interest rates on some U.S.
one-month Treasury bills turned negative on Monday on demand fed
by expectations that a federal insurance program covering large
bank accounts will not be renewed by the end of the year.
Bets the Transaction Account Guarantee (TAG) program will
not exist after two weeks have intensified, driving bids for
other perceived safe vehicles to park cash including Treasury
and agency bills and money market mutual funds.
Last Thursday, Senate failed to overcome a procedural
challenge raised by Republicans against a bill to extend TAG for
The TAG program, set to expire on Dec. 31, was created
during the global credit crisis to provide unlimited guarantees
for non-interest bearing checking accounts. Prior to TAG, the
Federal Deposit Insurance Corp covered individual accounts up to
"You are seeing the rejection of the TAG bill resulting in
flows coming into Treasuries," said Shyam Rajan, an interest
rate strategist with Bank of America Merrill Lynch in New York.
In early Monday trading, the interest rates on T-bills due
in Jan. 17 and Jan. 24 were last offered at minus 0.25 basis
point, down half a basis point from Friday's close, according to
The last time one-month T-bills was in negative territory
occurred in January.