On the October 13 auctions for 4- and 8-week bills, and the "shortest" 30-year bond (29 years, 10 months), the Treasury had to pay noticeably higher yields in order to attract buyers.
The Treasury sold $62.7 billion worth of 4-week bills; at $152.7 billion in tender, the T/A ratio ended up at 2.44. This is down from 2.67 last week and the lowest in at least five weeks. The decline in T/A came with a rise in the median yield on the auctioned bills, from last week's 2.85 percent to 3.19 percent.
Eight-week bills worth of $52.2 billion were sold at a median yield of 3.4 percent. This is up sharply from 3.15 percent a week ago, while the T/A dropped from 2.46 to 2.42. This is the lowest T/A in at least nine weeks.
The Treasury also sold $18 billion worth of 30-year bonds. Buyers tendered $43 billion, placing the T/A at 2.39. This is down from the last auction on September 13, when buyers tendered $2.42 for every $1 accepted. The median yield at the 30-year auction rose from 3.45 percent last month to 3.85 percent.
The T/A ratio is one indicator of the market's willingness to purchase U.S. debt. The ratio has declined over the past ten years for both 10-year Treasury notes and 30-year Treasury bonds. Meanwhile, yields on both securities have increased.
The three auctions took place on the heels of the Social Security Administration's announcement of COLA adjustments in Social Security benefits. Fox Business reports that benefits
are set to rise by 8.7% in 2023, the biggest bump in four decades as stubbornly high inflation erodes the buying power of retired Americans ... The increase, known as cost-of-living-adjustment (COLA), is the biggest since 1981 ... It will increase the average monthly benefit by about $140.
The increase in COLA-adjusted benefits will put further pressure on the federal budget and contribute to a pessimistic outlook for the U.S. government's ability to balance its budget.
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