"They have no choice but to buy short-dated Treasury bills," Carl Lantz, interest rate strategist with Credit Suisse in New York said of money market funds.
One-month T-bill yield traded 0.14 percent, down 43 basis points from late Tuesday. It reached briefly below zero percent, according to analysts, which is the lowest level since the one-month bill was reintroduced in 2001.
The scramble for short-dated government debt was sparked by troubles at the Reserve Primary Fund. The money market mutual fund fell below $1 a share in net asset value due to losses on its holding of securities issued by Lehman.
“I think this is the money market going into Main Street, says William Larkin of Cabot Money Management. "Retail investors are running with fear into T-bills or government backed money market accounts.”
“The mistake here is that they’re going into something that’s too short,” he adds. “They need to look at something like government backed home financing securities.”
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Trader disclosure: On Sept 17, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WMT), (MSFT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL) And (AAPL) Collar; Najarian Owns (MS) And (MS) Collar; Najarian Owns (TSO) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (XLF) And (XLF) Collar; Finerman Owns Owns (GS), (JNJ), (MSFT), (SUN), (TSO); Finerman's Firm Is Short (XLF), (IYR), (IJR), (MDY), (IWM), (SPY), (BBT), (COF)
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