Four-week T-bills auction
The U.S. Department of the Treasury conducted the weekly auction for four-week Treasury bills, or T-bills, on April 12. The issuance was $35 billion—the same as the previous week’s auction.
The bid-to-cover ratio of these bills shows the overall demand. It rose marginally by 0.6% from the previous week to 3.6x. Coverage of the one-month T-bills auction averaged 4.2x in 2015.
The high discount rate for the April 12 auction came in at 0.2%—higher than 0.19% in the previous week.
Market demand fell
Market demand for four-week T-bills fell last week to 29.1%—the lowest since the January 20 auction. It fell from 41.6% in the previous week. The fundamental demand also fell. The demand for safe-haven T-bills declined due to the rally in the stock market after a rise in oil prices.
The percentage of indirect bids fell to 24.3% from 36.3% 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 4.8% from 5.3% week-over-week. Direct bidders include domestic money managers—for example, BlackRock (BLK) and Wells Fargo (WFC).
The share of primary dealers rose to 70.9% from 58.4% 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).