A very slow week for US debt auctions. On Wednesday there was a 20 year bond auction. The amount sold was $13 billion. The high yield was 4.8%, up from last month’s auction but about where expected. Overall demand and that from foreign buyers was good. The foreign buying was positive as it occurred for a relatively long-term instrument, although the rate had to be jacked up to attract those buyers. The aftermarket continues to generally push for higher rates on US debt.
The only other auction this week was a ten-year TIPS, or inflation protected note, $24 billion worth. The “real” or after inflation, yield was 1.43%, lower than expected. Demand was good. The real rate has been ticking up in recent months, even as inflation and inflation expectations are declining. I will continue to believe that investors are demanding higher rates as the appears to be no end to huge US deficits.
