US Treasuries to be Sold in $100 Denomination

Starting on April 7, it will be possible for investors to purchase US treasury bonds in $100 denominations. Until now, the smallest size was $1,000. This move will benefit both the US government and to investors. “The new, lower minimum Treasury amount will put marketable securities within reach of more savers and investors in the United States and around the world,” said Anthony Ryan, Assistant Secretary of the Treasury for Financial Markets. This is something the US government should have done ages ago.

With the floor at $1,000, the T-note, bill, bond and TIPS were out of reach of the small investors. With the US government’s borrowing needs on the rise, and with investors leery of the stock market, the move is necessary. At the same time, though, it may not be much of a success.

The fact of the matter is that a great many investors have fled to the relative safety of US Treasuries. As a result, yields are dreadfully low. Reuters reported, “The 3-month bill secondary market yield of 0.53 percent this week was the lowest in more than 50 years. In the most recent auction on March 17, 3-month bills were sold at a high yield of only 1.1 percent.”

The wire service noted, “By contrast, HSBC Direct is offering a 3.05 percent annual percentage yield on its insured U.S. online savings account.” And since this account is FDIC insured, it is difficult to see how the small investor would benefit from buying Treasuries.

Nevertheless, it is important for those with a few dollars to save to have as many safe options as possible. Those interested in lending Uncle Sam some money can do so through www.treasurydirect.gov. The bidding process is non-competitive, and setting up an account is as easy as opening a bank account online.

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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