The U.S. Treasury has sold $179 billion of securities as it works to rebuild its cash balance, with yields at its auctions of three- and six-month debt rising to levels unseen since 2008. As trading opened Thursday, the Dow jumped 200 points as the 10-year yield eased from a four-year high.
The government began on Tuesday by auctioning $51 billion of three-month bills at a yield of 1.64%, 6 basis points more than similar-tenor debt sold on Feb. 12, and $45 billion of six-month bills at 1.82%.
All told, the offerings saw decent demand, given the market is facing a deluge of sales following the recent U.S. debt ceiling suspension.
“There didn’t appear to be much of an impact on the three- and six-month bill auctions, but the four-week ran into a little bit more of a digestion issue,” Thomas Simons, a money-market economist at Jefferies, said in a note.
Financing estimates from January show that the Treasury expects to issue $441 billion in net marketable debt in the current quarter, with the bulk of that in the short-term market.
This is just the beginning of the U.S. debt auction schedule. The Treasury will sell five- and seven-year maturities in the next two days, with both offerings larger than last month. It will also issue $15 billion of two-year floating-rate notes.
Growth funds have performed best over the past decade, outpacing value funds.
Tom di Galoma, managing director of government trading and strategy at Seaport Global Holdings, said just before the two-year auction that it should be met with decent demand.
However, “I worry more about the five-year and seven-year auctions,” he said in an email.
