Only one auction was held on Wednesday. The Treasury sold $33.83 billion worth of 17-week bills. The tender was relatively high, $103.26 billion, elevating the T/A ratio to 3.05. This is its first above three since mid-November.
Notably, despite the high tender-to-accept ratio, the median yield landed at 4.51 percent, the highest it has been for this maturity class since it was first introduced 12 weeks ago.
Since no 17-week batch has yet matured, we cannot use this auction to track the rollover cost problem for the federal debt. We can, however, note that the yield has increased gradually over the past three months, from 4.1 percent at the first auction, via 4.275 percent eight weeks ago, to 4.48 percent last week.
The rise in auction yield is explainable in the context of what the 17-week bill pays in the secondary market. In the past four auction days, the yield has been 4.69 percent (with 4.7 yesterday). It was 4.32, on average, in the period October 19-25, its first market days.
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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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