Surging demand has driven one-month T-bill prices higher, sending the yield down to 3.313% from 4.675% at the end of March. Bills maturing in three months yield 5.105%—a record incentive for lending to the government for a couple months more, according to Tradeweb data going back to 2001. Meanwhile, the lack of government refunding has led to a shortage of Treasury bills, reducing supply and lifting prices. The Treasury’s checking account at the Fed, known as the Treasury General Account, recently declined below $87 billion, from $964 billion last May. Tax revenues boosted the Treasury’s coffers to $265 billion as of Wednesday, but that remains one of the lowest levels since 2021. In turn, much of their cash has been parked at the Fed’s reverse repurchase facility, which borrows cash overnight from money funds and other institutions in exchange for Treasurys and similarly safe securities. Typically, investors wouldn’t buy bills with lower yields than the 4.8% annualized rate the Fed is now offering overnight. Analysts say some funds might have reached their $160 billion limit in the facility, forcing investors to buy one-month bills instead. Government money-market funds—those that invest in the safest assets such as Treasurys and repurchase agreements—have heavily favored ultrashort-term bonds since the Fed began tightening. According to JPMorgan research, bills with one-month to two-month maturities now make up 44% of those funds’ bill portfolios, up from about a fifth a year ago. Meanwhile, bills maturing in three to six months represent just 2% of their Treasury bill investments, down from roughly a third last May.