On Thursday, the Treasury held its weekly auctions for its shortest-maturity securities. The 4-week sold $66.9 billion, tendering $167.2 billion for a T/A of 2.5. While the tender-accept ratio was stable from previous weeks (2.6, 2.49 and 2.43), the median yield increased from last week's 3.53 percent to 3.75 percent.
The 8-week auction sold $56.6 billion worth of debt. At a T/A of 2.42, total tender amounted to #137.1 billion. This T/A was a notable drop from 2.62 last week and 2.7 the week before. The tender amount is the lowest in six weeks, while the yield of 3.965 percent is the highest of all active batches under this maturity.
Yields in the secondary market remained stable, with only minor increases:
Table 1
Source: U.S. Treasury
Structurally, market yields and auction yields have coalesced roughly around the four-percent level, where we predict they will remain for now.
The stabilization of auction yields has slowed down the increase in the average interest rate on total U.S. debt. After having increased from 1.87 percent on October 1 to 2.06 percent on November 14, the average yield has remained constant for a week now. We expect it to rise when the maturities of 26-week bills up to 5-year notes come up for auction again in the next four weeks.
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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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