Given the CPI and PPI releases this week, not surprising that interest rates rose and the sales of US debt found a difficult market reception. Monday started with $58 billion in three-year notes, pricing at a high interest rate of 3.97%, higher than last month and than expected. Demand was somewhat weak and the aftermarket during the rest of the week has seen generally even higher rates.
On Tuesday, $42 billion in ten-year notes were sold, at an interest rate of 4.47%, higher than last month and higher than expected. Overall demand was weaker than in recent auctions and foreign buying was also lower than typical. The aftermarket didn’t react too much one way or the other.
On Wednesday, a truly nasty 30-year bond auction occurred. The high yield was 5.05% on the $25 billion in debt, far higher than last month’s 4.88% and cracking the significant 5% yield barrier. The auction rate has been this high since 2007. Overall demand was somewhat weak, but foreign buying was in line with recent averages; not unexpected given the higher yield. Basically everyone bids at the yield they want and the foreign buyers wanted higher yield and they got it.
