The 17-week, 4-month bill was auctioned on Wednesday with $97.6 billion, down from $97.8 billion last week. With $34.1 billion accepted, this week's T/A fell to 2.86 from last week's 2.88.
The other auction on Wednesday broke the pattern from the last several auctions across the maturity spectrum. Instead of a steady or declining T/A ratio and rising yield, the 5-year note went in the opposite direction. By attracting tender offers of $106.6 billion, up from $99.9 billion last month, for $43 billion accepted (down from $44bn), the T/A ratio rose to 2.48 from 2.27 last month. This is the highest for this Treasury note since July 2020.
At the same time, the median auction yield fell from 4.13 percent in September for 4.119 percent.
It is too early to judge whether the upward trend in auction yields is coming to an end, but even if those yields will stabilize, the average interest cost for the U.S. debt will continue to rise, as new auctions on notes and bonds replace years-old debt. Adjusted for today's auctions, the estimated interest cost for the U.S. debt stands at 1.97 percent. This is up from 1.87 percent at the beginning of this month, and the beginning of the 2023 fiscal year.
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We do not give investment advice.
This blog provides analytical information solely for the purposes of 1) predicting the cost of the federal debt, and 2) for assessing the risk for a U.S. fiscal crisis. All information published here, forecasting and other, is based on publicly available data from the U.S. Treasury, including but not limited to approximately 65 percent of the current debt; on macroeconomic data, including but not limited to monetary policy decisions by the Federal Reserve; and on macroeconomic theory.
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