U.S. Yield Curve Still Inverted

After the holidays, Treasury auctions are ramping up again. Tuesday started off the week with the 13- and 26-week auctions.

The 13-week sold $60.93 billion in debt, for which investors tendered $141.97 (T/A=2.33). At a median yield of 4.33, this auction produced the highest interest rate for this maturity class in at least 20 weeks. 

The newly auctioned batch of debt replaced $60.8 billion that matured with a yield of 3.28 percent. This adds an annualized $644 million to the cost of the U.S. debt.

At the 26-week auction, the Treasury received $130.79 billion in tender offers. Of these, $50.78 billion were accepted, producing a T/A of 2.58. The 4.58 percent median yield marked a sharp rise over the maturing $48.8 billion batch, which yielded 2.455 percent. This auction raised the annualized debt cost by $1.128 billion, for a total debt-cost hike of $1.774 billion.

In the secondary market, we have seen a trend upward in rates on the 4-week bill, but interest rates have risen on most maturities. The pause in rate hikes in December appears to be broken. 

The inverted yield curve remains unchanged:

Figure 1

Source: U.S. Treasury

With today's auctions, raising the median yield on two frequently traded maturity classes, our model over the U.S. debt estimates that the annual interest rate on the debt now stands at 2.21 percent. It was 1.87 percent on October 1, the start of the 2023 fiscal year.

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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.