In its monthly auction for 1-year bills, the Treasury on Tuesday sold $38.3 billion worth of debt. This was a hair below the maturing batch of $38.8 billion. The auction attracted $100.4 billion in tender offers, resulting in a T/A ratio of 2.62, in line with the past three auctions, but lower than the 2.82-3.2 T/A's that the 1-year auctions saw early in the year.
The median yield at today's auction climbed to 4.52 percent, a modest increase over last month's 4.45 percent. This marks the second month in a row above four percent.
The biggest impact of today's auction yield is its increase in the cost of the U.S. debt. The maturing batch came with a median yield of 0.215 percent; today's auction added an annualized $1.648 billion to the cost of the debt. This number was big enough to hike the estimated average annual interest rate on the current U.S. debt to 2.12 percent. This rate was estimated at 1.87 percent at the beginning of this fiscal year.
Only modest changes took place on the secondary market for U.S. securities. The inverted yield curve we reported on yesterday remains in place.
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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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