Why the 3-Month T-Bill Yield Signals Market Anxiety

Lucas and Luna dissect the surprising rise in the 3-month Treasury bill yield to 3.78 percent, up from 3.77. While most attention is on the 10-year and 2-year, the short end of the curve is flashing a subtle warning. With the 10-year yield at 4.49 and the curve steepening, the 3-month rate—a proxy for funding stress and liquidity—has been creeping higher even as the Fed holds rates steady. Lucas explains what drives this yield, how it relates to repo markets and money market funds, and why a rising 3-month yield can signal that banks are hoarding cash. Luna weighs in with a historical example from September 2019 when similar moves preceded a repo crisis. They also explore what the current 42 basis point spread between the 10-year and 2-year tells us about recession odds, and why the 3-month might be the canary in the coal mine. Along the way, they touch on the Fed's interest on reserve balances at 3.65 and how that anchors the front end. A focused look at the forgotten yield that matters. #3MonthTBill #TreasuryYields #BondMarket #ShortEnd #LiquidityRisk #FundingStress #FedPolicy #IOER #MoneyMarkets #RepoMarket #YieldCurve #CurveSteepening #EconomicIndicator #RecessionSignal #Finance #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo