Treasury Bill Yields Keep Rising

In this week's Treasury auctions for 4- and 8-week bills, the median yields went even higher than last week. 

Today's auction of the 4-week bill tendered $155 billion, with $67 billion accepted. The T/A is now at 2.31, which is down from 2.47 three weeks ago. Over the same period of time, the median yield at the auctions has increased from 2.58 percent to 3.355 percent. 

The opposite trends of the T/A ratio and the yield are signs of declining market interest, though it is worth noting that the day before this auction, the Treasury sold the first-ever batch of its new 17-week, or 4-month bill. That auction yielded 4.1 percent, which may have satisfied many investors in the short-term end of the maturity spectrum.

Thursday's auction of 8-week bills tendered $138.6 billion, with $55 billion accepted. The T/A of 2.52 is up from the past three auctions, equal to where it was four weeks ago, but down from the three auctions prior to that. 

Median yield for the 8-week came out to 3.64 percent, marking the fourth 8-week auction in a row with a yield above three percent. Last week yielded 3.4 percent, and the two auctions before that 3.15 percent and three percent flat, respectively. Seven weeks ago, the 8-week auction produced a median yield of 2.7 percent.

Since the 4- and 8-week bills account for only $625.5 billion of the U.S. debt, the rise in yields do not have any major effects on the cost of the debt. However, the increases put further pressure on yields for longer maturities, especially since the 4-week auction yield is now higher than its current market yield. 

We expect the 4-week par yield from today's secondary market to exceed 3.4 percent, which would be a jump up from yesterday's 3.31 percent.