Another $1bn Added to U.S. Debt Cost

Monday Treasury auctions sold $63.9 billion worth of 13-week bills and $50.4 billion worth of 26-week bills. 

The 13-week tendered $162 billion for a T/A of 2.54. The median yield stopped at 4.065 percent. Last week, the 13-week bill raised $65.8 billion for the federal government, attracted $157 billion in tender offers and yielded 4.02 percent at the median. 

The T/A for today's auction is the highest in ten weeks. The yield at the auction ten weeks ago was 2.94 percent, which illustrates the precipitous rise in interest rates in recent weeks and months. This rise is even more pronounced when today's auction is compared to the batch of 13-week bills that it replaced. The maturing batch sold an accepted $60.5 billion ($159.9bn tender with T/A=2.54) at a median yield of 2.54 percent. 

The annualized interest cost of the newly auctioned batch of 13-week bills is $1.07 billion higher than the matured batch. Adjusted for maturity, this batch adds $267.5 million to the federal government's total annual debt cost.

At the 26-week auction, investors tendered $135.6 billion, of which the Treasury accepted $50.4 billion. With a T/A 2.69, this auction was largely in line with where the last eight weekly auctions have been. 

The yield of 4.45 percent was up marginally from last week's 4.405 percent, and the fifth 26-week auction in a row with a yield in excess of four percent. 

The maturing batch of 26-week bills was sold at a median yield of 1.34 percent. The accepted $47.8 billion thus carried an annualized cost of $641 million in interest payments. Today's auctioned batch carries an annualized cost of $2.243 billion. Adjusted for the maturity, this means that today's auction added $800 million to the federal debt cost. 

The actual fiscal cost of the yield increases in today's auctions amounts to $1.068 billion. This is the amount that Congress has to appropriate in order to cover for the higher interest costs from these two auctions. 

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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.