Tuesday's 1-year Treasury bill auction attracted $101.6 billion in tender offers, of which the Treasury accepted $39.3 billion. The T/A ratio ticked up a tenth from last month, landing at 2.59. This is notably lower than the previous ten auctions, when the T/A has exceeded 2.6; as recently as in March, the 1-year bill sold at a T/A of 3.05.
The median yield at today's auction stopped at 4.45 percent, which is a substantial jump from 3.895 percent on October 4.
This auction replaced $36.7 billion accepted at the November 2021 auction. The median yield at that auction was 0.215 percent, which put the annual cost of debt for this batch of 1-year bills at $83.2 million. The new batch, sold today, will cost $1.75 billion over the next year.
This is an increase of nearly $1.7 billion in federal-government outlays for the next year.
With today's auction, our model estimates the average interest rate on the federal debt to now be two percent exactly. The trend from the latter half of October continues, where this estimated rate rises by 0.01 percent per day.
Dramatic as it is, the rise in the median yield at today's auction does not precipitate any significant increase in the market yield on the 1-year bill. Today's auction yield is only an adjustment to the rate set at the secondary market, which has been least 4.5 percent since October 14.
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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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