Treasury Auction for the Week of July 6, 2010 (Updated with Results)

The US Treasury Department auctioned the following Treasury securities this week.

Tuesday July 6, 2010

• 13-week bill: $30 billion ($2 billion more than last week)
  
  Primary Dealer: $11.82 billion (39.4%; last week 46.3%)
  Direct Bidder: $2.44 billion (8.1%; last week 15%)
  Indirect Bidder: $14.38 billion (47.9%; last week 30.9%)
  Bid to Cover Ratio: 4.23 (last week 3.95)
  Investment Rate: 0.167% (last week 0.162%) *same as 4-week bill, 56-day CMB*
  High Rate: 0.165% (allotted at high: 51.92%)
  
  
• 26-week bill: $30 billion ($2 billion more than last week)
  
  Primary Dealer: $13.16 billion (43.9%; last week 32.1%)
  Direct Bidder: $4.40 billion (14.7%; last week 18.1%)
  Indirect Bidder: $11.16 billion (37.2%; last week 43.7%)
  Bid to Cover Ratio: 4.15 (last week 4.24)
  Investment Rate: 0.208% (last week 0.218%)
  High Rate: 0.205% (allotted at high: 73.41%)
  

Wednesday July 7, 2010

• 4-week bill: $36 billion (same as last week)
  
  Primary Dealer: $23.67 billion (65.8%; last week 64%)
  Direct Bidder: $5.09 billion (14.1%; last week 12.8%)
  Indirect Bidder: $6.98 billion (19.4%; last week 19.6%)
  Bid to Cover Ratio: 3.57 (last week 3.47)
  Investment Rate: 0.167% (last week 0.152%) *same as 13-week bill, 56-day CMB*
  High Rate: 0.165% (allotted at high: 88.94%)
  
  In addition, SOMA* purchased $3.78 billion 4-week bill.
  
  
• 56-day CMB* under SFP* for the Federal Reserve: $25 billion (same as last week)
  
  Primary Dealer: $13.64 billion (54.6%; last week 44.6%)
  Direct Bidder: $4.30 billion (17.2%; last week 11.1%)
  Indirect Bidder: $7.07 billion (28.3%; last week 44.3%)
  Bid to Cover Ratio: 4.40 (last week 4.50)
  Investment Rate: 0.167% (last week 0.183%) *same as 4-week bill, 13-week bill*
  High Rate: 0.165% (allotted at high: 24.41%)
  

Thursday July 8, 2010

• 10-year TIPS: $12 billion ($2 billion more than last original issue in January)
  
  Primary Dealer: $5.20 billion (43.3%; last original issue 52%)
  Direct Bidder: $0.50 billion (4%; last original issue 3%)
  Indirect Bidder: $6.15 billion (51.3%; last original issue 39.6%)
  Bid to Cover Ratio: 2.88 (last original issue 2.65)
  Interest Rate: 1.250% (last original issue 1.375%)
  High Yield: 1.295% (allotted at high: 43.46%)
  
  In addition, SOMA purchased $388 million 10-year TIPS.
  

Total for the week: $133 billion

• Bills: $121 billion
  
• Notes: $12 billion

Total for July 2010 so far: $133 billion

• Bills: $121 billion
• Notes: $12 billion

Additional purchase by SOMA for July 2010 so far: $4.168 billion

• Bills: $3.78 billion
  
• Notes: $388 million
  

Treasury Auctions from July 2009 to June 2010 (1-Year Anniversary Special)

(Click on the chart for sharper image.)

Observations:

After subdued fall and winter auctions, the treasury auctions spiked in March, due to the increased issuance of short-term bills, in particular, 56-day CMB (Cash Management Bill) to raise money for the use of Federal Reserve (and the money goes to the "Supplemental Financing Account" at the Federal Reserve; the balance as of June 30 is $199,965 million).

In addition to the 56-day CMB, there has been a noticeable increase in short-term bill issuance since January.

• Weekly issuance of 4-week bill went from $10 billion in January to $36 billion in the last week of June;
• Weekly issuance of 13-week bill went from $23 billion in January to $28 billion in June; and
• Weekly issuance of 26-week bill went from $25 billion in January to $28 billion in June.

The dotted line on the chart indicates the total amount of short-term bills each month.

The issuance of notes and bonds declined in June to below $180 billion per month for the first time since July 2009. 12-month average is $193.15 billion per month.

This is despite the Treasury Secretary Tim Geithner's remarks last October that the Treasury plans to lengthen the average maturity of debt from 49 months to 72 months.

Looking at the actual auction results for the last 12 months, particularly since the beginning of this year, the opposite seems to be true; the Treasury Department is borrowing using short-term debt to fund the government spending, which by nature is long-term.