Tuesday saw a $69 billion auction of two-year notes. Look again at the enormous size of these auctions. Our debt pile is immense and growing every week. This auction had a high yield of 3.79%, lower than last month, slightly lower than expected, which is a positive. Demand characteristics were okay, but not great. Foreign buyers had significantly less of a presence in this auction than similar recent ones. Wednesday was five-year note day. $70 billion sold at a high interest rate of 3.88%, slightly lower than last month, but a little higher than expected. Foreign demand at this auction was subpar, with 65% of the notes bought from overseas, compared to 78% in the same auction a month ago. The final auction of the week was a 7-year note offering with a value of $44 billion. The interest rate paid was lower than the prior month, demand characteristics were mixed, but overall it was an acceptable week for US debt sales; if you ignore that this is another $183 billion of debt carrying far higher interest payments than just two years ago.
