US Government Sells Record $638 Billion of Treasury Bills Amid Yield Shift

The US government sold $638 billion of Treasury bills during the week, with maturities ranging from 1 month to 1 year. The auctions were spread over seven days and included four that sold more than $100 billion each.

Despite a lack of auctions for longer-term notes (2-year to 10-year) and bonds (20-year and 30-year), the short-term Treasury yields edged down this week after the FOMC's no-rate-hike meeting at the end of July. The bond market had already priced in a rate hike, but the expectation shifted back to the September meeting.

The surge in T-bill issuance has pushed the amount of T-bills outstanding to $7 trillion by the end of July, up by $1 trillion from a year ago. However, the total amount of marketable securities outstanding has ballooned by $2.5 trillion year-over-year to $31.4 trillion.

The 10-year Treasury yield declined by 10 basis points during the week to 4.65%, following the US-Japanese intervention in the currency markets. This intervention temporarily removed the threat that Japan's authorities would sell some of their Treasury securities to raise dollars needed to buy yen, which could have driven up long-term Treasury yields further.