Average Debt Cost Rises to 2.1 Percent

Treasury auctions on Wednesday covered the 4-week, 8-week, and 17-week bills.  

The 4-week bill attracted $142.2 billion in tender, substantially less than the $167.2 billion from last week and the $174.6 billion from a week before. The Treasury accepted only $56.8 billion, down $10.1 billion from last week. This move maintained the T/A ratio at 2.5, but forced the Treasury to raise the median yield from 3.75 percent to 3.9.

Investors tendered the same amount for the 8-week, with the Treasury accepting $51.6 billion. The accepted amount was similar to the amounts from the last two auctions, but the tender was up from $137.1 last week. The T/A of 2.76 was a jump from 2.42 last week, and is the highest for any active batch of 8-week bills. 

The 17-week bill, which was sold for the sixth time since its introduction, attracted $108 billion in tender offers. This is the highest amount for any 17-week auction. The accepted volume of $34.1 billion is very close to what the Treasury has accepted at all the other auctions of this maturity. The T/A of 3.17 was up modestly from last week's 3.09 and 3.14 the week before.

Notably, the yield on the 17-week crept up to 4.37, the highest on record for this maturity.

For the first time this fiscal year, a Treasury auction resulted in a reduction of the debt cost. The maturing batch of 4-week bills came with an annualized cost of $2.386 billion. Thanks to the much lower debt volume sold in today's auction, the annualized cost for the new batch stopped at $2.215 billion, a reduction of $170 million.

The annualized debt cost at the 8-week auction was $683 million higher than for the maturing batch.

In the secondary market, the most notable event was a spike in the 4-week bill yield, from 3.97 percent yesterday to 4.12 percent. The only other noteworthy change was a drop in the 20-year yield, from 4.05 percent to 3.97 percent. All maturities from 5 years and up now yield below 4 percent in the secondary market. They also yield less there than the median yield at their latest auctions. 

As of November 22, total U.S. debt stands at $31,348.3 billion. The average estimated interest rate on this debt is 2.1 percent.

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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.