Auctions Lower Debt Cost

The Thursday auctions sold a total of $92.44 billion, divided equally between the 4- and 8-week bills. These auctions replaced $113.6 billion worth of maturing debt under these two maturities. 

For the first time since the start of this fiscal year, a Treasury auction actually lowered the cost of the U.S. debt. The maturing batches carried a total, annualized debt cost of $4.362 billion. The newly sold batches cost $3.411 billion, again annualized. 

This reduction in the debt cost is divided between a smaller debt amount sold—a total reduction of $21.16 billion—and a lower yield for the 4-week bills. These shortest-maturity Treasury securities sold at a median yield of 3.5 percent, compared to 3.9 percent for the maturing batch.

The yield climbed marginally on the 8-week bills, from 3.78 percent for the maturing batch to 3.88 percent. However, the reduction in active debt under this maturity class outweighed the marginal yield increase.

Both auctions saw a drop in the tender-to-accept ratio. The 4-week attracted $130.86 billion for a T/A of 2.83, the first below 3 in five weeks. Investors tendered $122.01 billion for the 8-week, resulting in a T/A of 2.64. This is the lowest it has been in six weeks.

As of December 21st, the total U.S. debt stock amounted to $31,319.54 billion. It has been steady just above $31.3 trillion since mid-November. We anticipate a steady rise to begin in the first quarter of the new year, as economic activity commonly declines after the holiday-spending season. 

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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.