The financial markets have been wiping the floor with investors lately, and, as T-Bill rates hit 0.0304%, investors are moving toward the safety of short-term assets.

Carlos Leitao, chief strategist and economist at Laurentian Bank, calls it a “huge wave of panic,” and likens the situation to investors stuffing money under their mattresses.

The current T-Bill yields mean that a $1,000,000 investment will pay $1,000,076 at maturity, a rate that doesn’t come close to keeping up with inflation.

The situation suggests that investors are liquidating what they view as less-than-safe assets, and investing in treasuries, driving down the yield with such high demand.

Unfortunately, this isn’t the beginning, nor will it be the end of investor timidity.

It’s not just investors, banks too are hording cash for fear of the unknown. According to T.J. Marta, fixed income strategist at RBC Capital Markets, computerized trading systems could be hurting too. “We’re afraid of black-box type systems. They would have gotten buy signals on spread and would have been blown out of the water by now.”

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