Get out of T-Bill now!

an article on Barron's about T-Bill is worth to read.

here is how i interpret it:

1, 3 month T-B yield is closing to zero, n 20 year T-B is at its lowest yield after 1940s.

2, if any of these happened, T-B will up again, (1) the economy unexpectedly strengthens in 2009; (2) the dollar weakens significantly;(3) inflation shows signs of reaccelerating.

government trys to stimulate the econmic while wants to seek for over 1 trillion fund for deficit through T-Bill selling. in 2009 alone, goverment need to issue over $100 billion 30 yr bond, maybe as much as $200 billion, rate zero cant last.

3, gold price is hurting T-Bill as well becoz as similar product to fight inflation, gold price is rising in the past two months when T-Bill yield is running the other way. USD is weaken against EURO, that also lowens the attaction of US Treasuries.

4, individual want to short T-Bill, try the Ultrashort Lehman 20+Year Treasury Proshares (TBT) and the smaller Ultrashort Lehman 7-10 Year Treasury Proshares (PST), or simply sell short of iShares Barclays 20+Year Treasury Bond Fund (TLT).

5, only T-Bill has problem is US Treasuries, other Junk Bonds are fine, including municipal bonds, AAA ranking, 30 yr yield at 5.25%; Long-term corporate bonds, BBB, at about 8% yield; Preferred stock now is yielding at 9%+, (BAC and MS).

6, municipal bond isnt the haven becoz of low tax and outspending of public need are suqeezing states and local government, even california is in deep problem now.

corporate bonds also have risk, althought return is nice, such as Ford offered 27% return on its 30 yr bill, but bond investors are having problem to make sure the company's existing or stock price wouldnt significantly come back after the global economic recession.

speaking from personal experiences, corp bond goes higher isnt usually a good sign for that corp, becoz that means the money liquidation in that corp is having problems that they need to sell bonds for salaries or daily business runnings.

7,

For those seeking the safety of Treasuries, the best bet probably is TIPS, or Treasury Inflation Protected Securities. They provide much better yields than ordinary Treasuries unless inflation disappears.

TIPS offer a nominal yield, plus principal indexed to inflation. If inflation is 3% annually in the next 10 years, in line with the historical average, TIPS will return 5.25% (the 2.25% nominal yield plus 3% for the inflation component). There are several ways to invest in TIPS, including through open-end mutual funds such as the Vanguard Inflation-Protected Securities fund (VIPSX), and an ETF, the iShares Barclays US Treasury Inflation Protected Securities Fund (TIP).