Normally I’m not a big fan of needles. However, when the prescription is from the Bank of Canada, I’ll make an exception. Today the bank of Canada will be adding about $2 billion in short term Treasury Bills into the market. Sounds boring, eh? Well its not.

Ever since the beginning of the Credit Crunch™ people have been scarred and moved their short term investments from Commercial Paper & Banker Acceptance to Treasury Bills. As the Canadian Govt is still running surpluses, supply has been tight and rates tumbled as the price rose (classic supply/demand). The 1 month T-Bill has been as low 1.2% institutionally a few weeks ago. This morning with the new injection, we’re back in the 2.90% range. Just a quick note that although many sources will be quoting that 1 month Bill at 2.90%, as a retail investor, expect a much lower quote. I’ll save that explanation for another day…. unless you ask my in the forum.