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US Sells $638B in T-Bills as Yen Intervention Cools Yields
Treasury sold $638B in bills across seven auctions. Yen intervention by US and Japan drove 10-year yield down 10bp to 4.65%. T-bill stock hits $7 trillion.
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The Treasury Department auctioned $638 billion in bills this week, with maturities from one month to one year. Seven auctions were held. Three of them sold more than $100 billion each. A fourth came in at $99 billion. No Treasury notes or bonds were offered during the week.
Short-term yields moved lower after the Federal Reserve held its policy rate steady at the July meeting. The 6-month bill sold at Monday's auction at a high yield of 3.855%, down roughly 10 basis points from the auction just before the FOMC decision. In the secondary market, the 6-month yield slipped to 3.96% by Friday afternoon, the Treasury Department reported.
The spread between the 6-month yield and the effective federal funds rate now stands at 33 basis points. That gap suggests the market still prices in a rate hike, though the expected timing has shifted from July to the September meeting.
Long-term yields fell after the U.S. and Japan intervened together to support the yen, the first joint intervention since 1998. The Treasury Department bought yen and sold euros, an unusual move that removed, at least temporarily, the risk that Japan would sell U.S. Treasuries to raise dollars for its own intervention. The 10-year yield dropped 10 basis points on the week to 4.65%. The 30-year yield declined 8 basis points to 5.19%, retreating from a two-decade high set the prior week.