Debt Composition Trends to Shorter Maturities

The Treasury auctions on Monday sold $58.6 billion worth of 13-week bills and $48.8 billion under the 26-week maturity. The 13-week attracted an even $149 billion in tender, for a T/A ratio of 2.54. This ratio is the highest in five weeks, when it was also 2.54; it has been 12 weeks since the T/A was higher. 

A high T/A is good for the Treasury, as it facilitates the sale of debt. 

At the 26-week auction, investors tendered $119.4 billion, resulting in a 2.45 T/A. This is the lowest in seven weeks.

Both auctions produced a decline in the median yield:

• 13-week: from 4.22 percent last week to 4.205 percent this week;
• 26-week: from 4.5 percent to 4.49 percent.

The maturing batches in both auctions both came with lower yields. The annualized increase in debt cost for the 13-week bill was $747 million; the 26-week auction added $1.41 billion. In total, the annualized debt cost increased by $2.157 billion.

Despite the fact that median yields on the auctions were lower (albeit marginally for the 26-week), the estimated average interest rate on the U.S. debt for FY2023 is now 2.14 percent. At the beginning of the fiscal year, it was 1.87 percent. 

As of today, an estimated 16.35 percent of the U.S. debt consists of bills, i.e., Treasury securities with a maturity of one year or less. An estimated 65.92 percent is notes, ranging from two to ten years in maturity. Bonds account for an estimated 17.73 percent. 

On October 12, the estimated shares were 15.08% for bills, 67.14 percent for notes, and 17.79 percent for bonds. This indicates a slow drift in the debt composition toward short maturities. 

---

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.