by ObiWanCanownme
Right now the one month t-bill is trading at below 3.5%. Meanwhile, the fed’s reverse repo rate is almost 5%, and the three month t-bill is over 5%. The one month is actually the LOWEST point on the yield curve even though the rest of the curve is inverted all the way up to the 10 year and the 30 year, which are not inverted.
What are the best explanations of the one-month being so low? I’ve heard people say “collateral shortage,” which could make sense, although I’m not sure I fully understand why that would cause the one month to be lower than the ten-year. If everybody needs treasuries as collateral, wouldn’t a higher-yielding and longer-term instrument be better collateral?
I’ve also heard people say this is about the debt ceiling, but that doesn’t make sense to me because, if the market is actually concerned about a government default, wouldn’t the 6-month and 12-month yields be pushed above the 3-month as a result?
All insight anyone has is appreciated.