Four-week Treasury bills auction
The U.S. Department of the Treasury conducted the weekly auction for four-week Treasury bills, or T-bills, on July 21. The issuance was $40 billion—$5 billion lower than in the previous week.
The bid-to-cover ratio depicts overall demand. It rose 18.10% from the previous week to 3.5x. So far, the coverage at the one-month T-bills auction has averaged 3.8x in 2015—down from 4.4x for all of the auctions held in 2014.
The high discount rate for the July 14 auction came in at 0.035%—higher than 0.020% in the previous week.
Market demand rises
The market demand for the four-week T-bills rose from the previous week. The percentage of indirect bids rose to 22.20% from 15.70% week-over-week. Indirect bidders include foreign central banks.
Domestic investors’ share rose marginally for the auction held last week. The percentage of direct bids rose to 6.90% from 6.70% week-over-week. Direct bidders include domestic money managers—for example, BlackRock (BLK) and Wells Fargo (WFC).
The share of primary dealer bids fell to 70.90% from 77.60% in the previous week. Primary dealers are a group of 22 broker-dealers authorized by the Fed. They’re obligated to bid at U.S. Treasury auctions and take up the excess supply. They include firms like JPMorgan Chase (JPM).
For more bond market trends and analysis, please visit Market Realist’s Fixed Income page.