With $151 billion worth of short-term bills up for grabs in today's auction
- $51 billion of 3-month bills
- $45 billion of 6-month bills
- $55 billion of 4-week bills
Adding to that, there will also be $28 billion of 2-year notes that will be auctioned today too. While Treasury auctions have been soft in recent weeks, looking at yields and where they are now it may be something that could be hard to ignore.
Yields are trading near highs not seen in a decade, and that provides quite a bit of incentive for dealers to snap them up - though it will not be a question of demand, but more so at what price levels will they be taken up.
Treasury auctions are going to come more into focus as the Fed rolls off its balance sheet and the issue on the US' debt burden continues to grow larger - since they provide an indication of borrowing costs.
There are quarters in the market who believe that Treasury yields are nearing their cap (10-year yields near 3%), and this provides the perfect buying opportunity if they are right.
About the dollar, it's a mixed bag when it comes to these auctions. Strong demand could see flows into the currency, although a swelling fiscal deficit is a negative point and something to worry down the road for the greenback.
But right now, the rise in yields this morning is providing comfort for the dollar and is continuing to make Treasuries look more attractive, even to short-term investors who are known to be picky about their asset allocation.
In total, there will be $258 billion worth of debt auctioned by the US Treasury this week. And this is just the start. It's something that traders and investors will have to get used to this year.
