First up, another massive $69 billion in two-year notes. High rate of 3.46%, lower than last month and other recent months, but a little higher than expected. Overall demand seemed strong, but foreign demand was weaker than usual. This is a short-term instrument, so I expect there should be less drama. The other auctions this week are relatively shorter term as well.
So Wednesday it was $70 billion more added to the debt pile, in five-year notes. Not a particularly good auction, high interest was 3.62%, down from 3.82% a month ago, but a good bit higher than expected. Overall demand was weak, but foreign buyers hung in there at the usual proportion of the auction. Sort of similar to the two-year auction.
And finally on Thursday we had $44 billion in 7-year notes, an auction that seemed to me to be pretty good. The high interest rate was 3.79%, down significantly from last month and just as expected. Overall demand was in line with recent averages, as was foreign buying. All the volatility in the stock market may be helping the Treasury market, and on these shorter term debt instruments, there probably is less concern about the long-run impacts of deficits on inflation or economic growth. Rates are generally down in the after-market. We will see what next week’s longer term auctions bring.
