Weird week to be selling debt, but US debt is a likely turkey. $69 billion more piled on in two-year notes on Monday. A pretty good auction, as have been most of the short-term debt ones recently. Buyers are comfortable at the short end and the yields are still pretty good. This one priced at a rate of 3.49%, a little lower than last month and exactly as expected. Overall demand was good, with slightly above average foreign buyers.
And right on schedule on Tuesday, another massive $70 billion in five-year notes, just somewhat longer than the two-year notes, but still on the short end, kind of poor results. At 3.56% the high interest rate was a little lower than last month, but a little higher than expected. Demand was okay overall, but foreign buyers were lower participants than usual. If the seven-year note auction is similar, it will be a bad sign that leeriness about US debt is moving down the term ladder to the short end.
The seven-year auction, $44 billion worth, was mediocre as well, with a high interest rate of 3.78%, just slightly below last month’s rate. Overall demand was below the ten prior auctions’ average, and foreign buyers went on a bit of a strike, taking far less of the auction amount than they typically do. As I said above, it appears concerns about US debt are moving down toward the medium and short-term instruments.
