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Treasury Auctions $87B In Debt

Wayne Duggan

The U.S. Treasury completed auctions for $87 billion in debt on Monday morning, the large part of the $98 billion in debt it plans to sell this week.

What Happened

The Treasury offered $48 billion in 13-week bills maturing on June 20 and $39 billion in 26-week bills maturing on Sept. 20. The median rate on the 13-week bills was 2.38 percent, while the median rate on the 26-week bills was 2.43 percent.

Why It’s Important

Stock market investors have been watching the bond market closely for any signs of economic trouble on the horizon. Strangely enough, the bond market and the stock market have been giving investors mixed signals so far in 2019. As of late last week, 10-year Treasury yields were near their low point of 2019 at around 2.6 percent. At the same time, the S&P 500 is trading near its high point for the year at 2,827.

Typically, falling bond yields and falling stock prices are indicators of fears about slowing economic growth.

The Federal Reserve recently said it's planning to be patient on further rate hikes after getting some mixed data on the strength of the global economy, particularly in Europe and China. According to CME Group, the bond market is pricing in a 71.7-percent chance the Fed’s target rate range of 2.25 percent to 2.50 percent will remain in place through the end of the year. The bond market is pricing in a 28.3-percent chance of an interest rate cut sometime in 2019.

What’s Next

The Treasury is set to action another $11 billion in nine-year 10-month Treasury inflation protected securities on Thursday morning. The TIPS mature on Jan. 15, 2029. Noncompetitive offers must be received by noon ET on Thursday, while competitive offers must be received by 1 p.m.

The Federal Reserve will also be meeting on Wednesday and releasing its updated interest rate and economic forecasts.

Related Links:

Junk Bond Fund Outflow: Cause For Concern?

Is US Unemployment So Low That A Recession Is Unavoidable?

Photo credit: Almonroth, Wikimedia

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