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

Direct Bidders Lost Interest in the 4-Week T-Bills Auction


Nov. 20 2020, Updated 1:06 p.m. ET

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 January 5. The issuance was $45 billion—the same as the previous five weeks.

The bid-to-cover ratio of these bills shows the overall demand. It rose by 6.2% from the previous week to 3.4x. The coverage at the one-month T-bills auction averaged 4.1x in 2015. It fell from 4.4x for all of the auctions held in 2014.

The high discount rate for the January 5 auction came in at 0.20%. It was higher than 0.17% in the previous week.

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Market demand fell

Market demand for four-week T-bills fell from the previous week. The percentage of indirect bids fell to 22.4% from 31.5% a week ago. Indirect bidders include foreign central banks.

Domestic investors’ interest in the auction also fell last week. The percentage of direct bids fell to 3.2% from 7.3% week-over-week. Direct bidders include domestic money managers—for example, BlackRock (BLK) and Wells Fargo (WFC).

The share of primary dealers rose to 74.4% from 61.2% in the previous week. 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 JPMorgan Chase (JPM) and Morgan Stanley (MS).

Investment impact

Mutual funds like the Vanguard GNMA Fund Investor Shares Fund (VFIIX) and the MFS Government Securities Fund – Class A (MFGSX) have exposure to T-bills.

VFIIX’s weekly return rose by 0.61%. MFGSX’s week-over-week return rose by 0.65%.

For more analysis on mutual funds, please visit Market Realist’s Mutual Funds page.


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