Investor demand meets 'relentless supply' of record-breaking US Treasury bond sales

investmentweek.co.uk:

According to the Treasury, this issuance will raise new cash from private investors of approximately $15.9bn

On 31 January, the Treasury released its Quarterly Refunding Statement, which announced it would be offering record sales to refund approximately $105.1bn of privately-held Treasury notes maturing on 15 February 2024.

According to the Treasury, this issuance will raise new cash from private investors of approximately $15.9bn. The move will involve a triple phased sale of 3-, 10- and 30-year notes this month, totalling $121bn overall.

The 3-year notes were sold for the amount of $54bn, maturing 15 February 2027, a 10-year note for $42bn which matures on 15 February 2034; and finally a 30-year bond of $25bn, maturing 15 February 2054.

Jerome Powell: Fed united in cutting rates this year

The 3-year note was auctioned at 1pm ET on 6 February, with the following two sales occurring individually on the following two consecutive days, respectively. All of these auctions will take place on a yield basis and will settle on 15 February.

The 3-year issuance is the largest since December 2021, but there were larger sales during the Covid-19 pandemic to help fund the emergency measures brought in during the pandemic.

Jon Day, global bond portfolio manager at Newton Investment Management, said that given the short maturity date of these assets, there is «much less risk» surrounding these deals. Given the 30-year issue of $25bn is the largest ever for this note, Day said the auction results will be «closely watched». 

In response to the completed sales so far, yields on US 10-year bonds jumped from around 3.9% at the end of last week to highs of 4.17% by Tuesday (6 February), settling at around 4.14% at the time of