Ten-Year Treasury Auctions Above 4 Percent

 The U.S. Treasury held two auctions today, the first of which sold $34.1 billion worth of 17-week bills. They tendered $107.2 billion, for a T/A of 3.14. This is a high tender-to-accept ratio compared to other short-maturity bills: the 13-week auction on November 7 produced a T/A of 2.54, while the 26-week from the same day came out at 2.69.

The 17-week auction landed a median yield of 4.25 percent, identical to last week's auction. Since the 17-week is a new bill under which no batch has yet matured, the annualized fiscal cost of this bill's auctions is $1.45 billion. Since these bills only run for 17 weeks, and therefore will be replaced twice over the next 12 months, the actual annual cost of this slice of U.S. government debt is uncertain. However, under the assumption that the 4.25 percent from today's auction will remain unchanged, this auction added $1.45 billion to the annual fiscal cost of the debt.

The other auction was for the 10-year note. Tendering $90.5 billion, for an accepted volume of $47.3 billion, it landed a T/A of 1.91. Last month's auction ended with a T/A of 2.34, but it is important to note that only one in three 10-year note auctions are actually for 10-year maturities. In a recurring pattern, every third one is for 9 years, 11 months, and every third one is for 9 years, 10 months. These two tend to draw a bit more money per accepted dollar. 

The median yield at the auction came out at 4.044 percent close to its 4.14 percent at secondary-market trade yesterday. This is the only batch of 10-year notes currently active, which yields more than 4 percent. This yield is significantly higher than the 1.63 percent on the batch that just matured. That, and the almost-doubled accepted volume at today's auction ($47.3bn compared to $24bn), increases the annual fiscal cost of this batch of 10-year notes from $390 million to $1.91 billion.

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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.