52-week Treasury bills auction
The U.S. Department of the Treasury auctioned $16 billion worth of 52-week Treasury bills, or T-bills, on January 5, 2016. T-bills mature in a year or less. They’re at the very short end of the yield curve. Other Treasury securities like Treasury notes, or T-notes, and Treasury bonds, or T-bonds, are issued for longer maturities.
- The auction was held on January 5.
- The auction size was set at $16 billion—$2 billion higher than December’s auction.
- The issue’s high discount rate was lower at 0.67%—compared to 0.74% in the previous auction.
Overall demand rose
The bid-to-cover ratio rose by 10.3% to 3.95x month-over-month. In 2015, the ratio averaged 3.8x. The ratio averaged 4.2x in the auctions held in 2014.
The bid-to-cover ratio measures the overall demand for the auction. The higher the ratio, the higher the overall demand for the auction and vice versa.
Market demand fell
Market demand for 52-week T-bills fell from a month ago. The demand fell to 31.4% of the competitive accepted bids in January—from 39.7% in the previous auction.
The indirect bidders category includes bids from overseas governments. The allotment to this category fell to 27.0% in January from 33.2% in December. Direct bids include bids from domestic money managers like Invesco (IVZ) and Wells Fargo (WFC). The percentage of direct bidder allotments fell to 4.4% in January from 6.6% in the December auction.
Due to lower market demand, primary dealer bids were higher at 68.6% in January—compared to 60.3% in the previous auction. Primary dealers include companies like Credit Suisse (CS) and Goldman Sachs (GS).