Quiet Day for Treasury Auctions

On Thursday, the Federal Reserve sold debt under three maturities. The 4- and 8-week auctions pulled in $45.94 billion each, with the 4-week attracting $119.58 billion in tender offers from investors, and the 8-week getting $109.34 billion in offers. 

The tender-to-accept ratio for the 4-week bill was 2.6; last week's 2.83 was the first in four weeks below 3 in four weeks. The 8-week also attracted a lower tender volume given the debt sold: the T/A stopped at 2.38, down from a top of 2.88 only four weeks ago.

The 4-week yield of 3.65 was on par with the three last auctions, but the 8-week came with a notable rise. Its 4.14 percent median yield was a leap up from 3.88 last week and a return to 4+ percent yield on this maturity class. 

Both these auctions lowered the total debt cost for the U.S. government, in both cases thanks to the Treasury selling about $10.6 billion less under each maturity, than the maturing batches. The total decline in the debt cost was $396 million annualized.

The Treasury also sold $35 million worth of 7-year notes. At a T/A of 2.45, investors tendered $85.87 billion and earned a 3.859 percent median interest rate. This auction replaced $29 worth of maturing 7-year notes, on which the median interest rate was 2.115 percent. As a result, this auction increased the Treasury's debt cost by $737 million. Subtracting the reduction from the other two auctions, the net increase was an annualized $341 million.

Secondary market rates stood still for the most part, the big exception being the 4-week bond which jumped from 3.86 percent yesterday to 4.04 percent today. The 8-week also ticked up, albeit marginally, from 4.33 to 4.39. All other moves were minor. 

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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.