U.S. Floods Market With $179 Billion of Debt in Just One Day

The U.S. Treasury on Tuesday sold $179 billion of securities as it works to rebuild its cash balance, with yields at its auctions of three-month and six-month debt rising to levels unseen since 2008.

The government auctioned $51 billion of three-month bills at a yield of 1.64 percent, 6 basis points more than similar-tenor notes sold on Feb. 12, while $45 billion of six-month debt yielded 1.82 percent. Its $55 billion sale of four-week notes was at a yield of 1.38 percent and the amount of bids that sale attracted relative to the offering size dropped to the lowest level since 2008. A $28 billion offering of two-year notes yielded 2.255 percent.

The market is being hit with a deluge of sales following the recent U.S. debt ceiling suspension, and that’s helping to push up the rates that borrowers demand. Concerns about the U.S. borrowing cap had forced the Treasury to trim the total amount of bills it had outstanding, but that’s no longer a problem and the government is now busy ramping up issuance. Financing estimates from January show that the Treasury expects to issue $441 billion in net marketable debt in the current quarter and the bulk of that is likely to be in the short-term market.

Further U.S. debt auctions are expected later this week, with sales of five- and seven-year maturities that are both larger than last month, as well as an offering of two-year floating-rate notes.