We are watching U.S. sovereign debt for reasons I am not yet at liberty to disclose but for what it is worth the reason is less financial than political. Everything is political.
From Wolf Street, August 8:
10-year and 30-year yields rose after rough auctions, despite huge issuance of T-bills to take pressure off long-term yields.
This week, the government sold $724 billion in Treasury securities spread over 10 auctions, held on four days. Of these sales, $505 billion were bills with maturities from 4 weeks to 52 weeks, including $100 billion of 4-week bills; and $219 billion were notes and bonds, including a somewhat rough auction of 10-year notes and what was called an “ugly” auction of 30-year bonds.
Type Auction date Billion $ Bills 13-week Aug-4 86.6 Bills 17-week Aug-6 65.2 Bills 26-week Aug-4 77.1 Bills 4-week Aug-7 100.3 Bills 52-week Aug-5 52.8 Bills 6-week Aug-5 89.7 Bills 8-week Aug-7 85.2 Bills 556.8 Notes 3-year Aug-5 77.7 Notes 10-year Aug-6 56.3 Bonds 30-year Aug-7 33.5 Notes & bonds 167.4 Total auction sales 724.2 This is the Mississippi River of debt, as we’ve come to call the massive flow of hundreds of billions of dollars sold at auctions every week that the market has to absorb.
This heavy skew toward T-bills puts a lot more T-bills out there that then mature constantly since they’re so short term (between 1 month and 12 months). All these maturing T-bills will have to be refinanced, on top of the issuance needed to fund the ongoing deficits with new T-bills. So the already huge T-bill auctions will become gigantic.
Despite the heavy skew toward T-bill issuance to take pressure off long-term yields, the 10-year yield rose by 7 basis points over the past four days to 4.29% today....
....MUCH MORE, a very nice orientation to set the mental map going forward.