In its auction on Wednesday, the Treasury sold $33.89 billion worth of 17-week bills. Tendering $98.56 billion, investors offered $2.91 per $1.00 accepted. At a median yield of 4.4 percent, this auction was well in line with the three last auctions, which averaged 4.375 percent.
Since it has only been nine weeks since the Treasury started selling 17-week bills, this batch was a 100 percent net addition to the Treasury's debt portfolio. As such, it raised the average interest rate on U.S. debt from 2.15 percent to 2.16 percent. If this was the actual cost of the current total debt of $31,304.15 billion (Dec.13), the Treasury would have to pay $676.6 billion in debt cost for this fiscal year. This estimate assumes that the debt does not grow one penny above where it stands currently.
The secondary market for Treasury securities maintains the inverted yield curve:
Figure 1
Source of raw data: U.S. Treasury
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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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