The Treasury Closes Out the Year with $2.1 Trillion in T-Bills

$118 billion in T-bills for the short week, way to wrap up a year of excess. Had this been a full week, I'm sure Timmy would have tried to slip an extra $100 billion in there.

"Foreign central banks" LOL.


Prices of longer-dated Treasury securities rose modestly Wednesday afternoon following a well-received auction of $32 billion in seven-year notes.

The buying extended Tuesday's rally and snapped the wave of selling since the start of last week, which sent the yields on both the two-year and 10-year notes to the highest levels since mid-August.

The rise in bond yields supported this week's $118 billion of government note sales, which have been more difficult than previous months due to thin trade during the last week of the year. The successful sale of the seven-year note wrapped up a record year of U.S. Treasury debt supply without major hiccups.

The supply of more than $2.1 trillion in Treasury notes and bonds this year was well absorbed by a wide range of buyers including foreign central banks, allowing the U.S. government to fund budget shortfalls and support the economy at historically low borrowing costs.

"Overall, [it was] an auction that was better than expected, a fitting end to a decade of Treasury issuance," said Aaron Kohli, U.S. government bond strategist at RBS Securities Inc in Stamford, Connecticut.

Wednesday's auction, conducted in a holiday-shortened week, drew bids that were 2.72 times the amount on offer. This bid-to-cover ratio compared with 2.76 in November and 2.65 in October. The average is 2.56 from the past 10 auctions.

Of course the news of another government infusion into zombified GMAC probably would have adversely affected Treasury attempts to fund unlimited GSE bailouts and whatever the hell else it is they are trying to pay for but who cares?

Happy New Year!!

(don't expect this to last):

"The government has been able to issue record amounts of paper at historically low yields," said Adam Brown, managing director of Treasurys trading at Barclays Capital Inc. in New York.

Brown noted that 2010 will be a "tougher" year for the Treasury to sell record amounts of paper. "With the economy growing again, and the Fed out of the market as a buyer, it will be tougher for the Treasury to sell at the same yield levels as 2009," he said.

$2.1 trillion in a year? Who the hell bought all that US debt? Oh wait... we know the answer already. As long as the Fed and banks acting as the Fed's fiduciary keep stuffing cash into Treasurys, they can keep this up forever. It's the Viagra of government debt and Timmy's happy to keep buffing Bernanke's balls if it means keeping up appearances. *fapfapfap*!

Watch that exit strategy! Maybe it involves MORE Treasurys!

And isn't $2.1 trillion nearly the EXACT size of the Fed's swollen balance sheet? Well if that's not a coincidence...

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...


Do you know what the breakdown of the $2.1t amounts to? To get that number, I assume that includes some refi's of other maturities. I thought that the deficit number for 09 was about $1.4t. Where does the difference come from?