uploads/// Week Treasury Bill Issuance versus Bid Cover Ratio

Overall demand rises for the 4-week Treasury bill auction


Nov. 20 2020, Updated 12:17 p.m. ET

4-week Treasury bill auction

The US Department of the Treasury conducted the weekly auction for 4-week Treasury bills (or T-bills) on February 10. The issuance was $40 billion, the same as in the previous week.

The bid-to-cover ratio for these bills rose from 3.8x to 3.9x week-over-week. Coverage at the 1-month T-bills (BIL) (MINT) auction has averaged 3.8x so far in 2015, down from 4.4x for all the auctions held in 2014. The high discount rate for the February 10 auction came in at 0.015%, 0.005% lower than a week ago.

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Indirect bidding falls

Market demand rose marginally from the previous week for the 4-week Treasury bills. However, the percentage of indirect bids fell from 24.7% to 23.4% week-over-week. Indirect bidders include foreign central banks.

Domestic investors showed higher interest in the auction as the percentage of direct bids rose. It rose from 4.8% to 6.4% week-over-week. Direct bids include domestic money managers, such as BlackRock (BLK).

The share of primary dealer bids fell marginally from 70.5% in the previous week to 70.3%. Primary dealers are a group of 22 broker dealers authorized by the Fed. They’re obligated to bid at US Treasury auctions and take up the excess supply. They include firms like J.P. Morgan (JPM), which is part of the SPDR Financial Select Sector Fund (XLF) and the SPDR Dow Jones Industrial Average ETF (DIA).

For more bond market trends and analysis, please visit Market Realist’s Fixed Income page.


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