This promised to be an interesting week for the debt auctions, given the swings in interest rates and various global concerns. First up on Tuesday was the sale of $69 billion in two-year notes. For the first time in a while, the yield was down, at 4.2% versus 4.32% last month, and also slightly lower than expected. Demand, however, was relatively weak, which again, I believe reflects the usual demand/price function whereby higher yields are going to attract more bidders. Foreign buyers did their part, participating at a slightly higher than normal rate.
Wednesday was a similar story. $70 billion in five-year notes was sold at a high interest rate of 4.39%, slightly below last month’s 4.41%, but higher than expected. Overall demand was good, in line with the average, but foreign buying was a little weak. Domestic buyers made up the gap. In the aftermarket, rates continue to drift upward.
Thursday finished up the week with $44 billion in seven-year notes, which sold at 4.51% high yield, unlike the other auctions this week, up from last month’s similar auction. Demand was a little bit above recent averages, but foreign buyers were less represented than usual. Rates are creeping upward as the debt pile grows and grows.
