Treasury Doubles Down on Short-Term Debt

With its auctions on Thursday, the Treasury doubled down on its policy to shift more and more of the federal debt over to short-term bills. The 4-week auction sold $71.13 billion in debt, for which investors tendered $169.72 billion. This resulted in a T/A of 2.39, the lowest in at least three months. 

Since the median yield sprang up to 4.4 percent, the highest in at least three months, it is fair to conclude that the market is saturated when it comes to the shortest-maturity instrument of U.S. debt. This observation is reinforced by a jump in the 4-week bill yield on the secondary market, from 4.59 percent yesterday to 4.69 percent today.

A similar but less pronounced trend is underway in 8-week bills. The $60.97 billion auctioned off by the Treasury was the highest number in at least four months; the tendered $152.88 billion resulted in a T/A of 2.51, an average rate for this maturity class. However, the yield climbed from last week's 4.42 percent to 4.48, suggesting modest enthusiasm among investors. 

The secondary-market yield rose here as well, from 4.62 percent to 4.66. 

In total, Treasury bills, which cover the maturity span from four weeks to a year, now account for an estimated 17.16 percent of total U.S. debt. This is more than two percentage points more than at the October 1 start of the 2023 fiscal year.

The high volumes sold under the 4- and 8-week maturity classes, together with their higher yields, helped push the estimated average interest rate on the U.S. debt up to 2.26 percent.

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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.