November’s last auction of Treasury notes ended with a whimper, rather than a bang.
Nearly $40 billion of government debt that matures in seven years was up for sale on Tuesday. The highest yield accepted by investors was 4.399%, well above the average of 4.258% for the prior six such auctions.
The yield was also about two basis points, or hundredths of a percentage point, higher than before the auction. Both those data points indicate that the government had to offer higher yields to entice investors to buy the debt.
The auction of the 7-year notes comes after the Treasury sold notes maturing in two years and five years on Monday. Monday’s five-year auction saw solid demand, while the two-year auction was soft, reinforcing the idea that investors are ready to buy longer-dated debt. An auction of 20-year bonds on Nov. 20 was strong as well.
Investors have interpreted those sales as a sign that investors remain willing to buy a growing supply of U.S. debt. Treasury issuance through October this year is 32% higher than at this time in 2022.
More supply can weigh on prices, sending yields higher. It matters because yields on 10-year Treasury notes determine the interest rates Americans pay on their credit cards, mortgages, and other bank loans.
Yields on
10-year
debt rose to more than 4.37% from 4.35% earlier. The
S&P 500
moved into negative territory, though it later recovered to just above the break-even line.
The next auction of Treasury notes, government debt that matures between two years and 10 years and pays interest every six months, is expected on Dec. 11. The maturity is expected to be three years. Investors can find the complete schedule here.
Write to Karishma Vanjani at [email protected].
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