{"id":27950,"date":"2023-06-27T02:15:00","date_gmt":"2023-06-27T06:15:00","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/longer-term-treasury-yields-to-rise-amid-flood-of-issuance\/"},"modified":"2023-06-27T02:15:02","modified_gmt":"2023-06-27T06:15:02","slug":"longer-term-treasury-yields-to-rise-amid-flood-of-issuance","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=27950","title":{"rendered":"Longer-Term Treasury Yields to Rise amid Flood of Issuance"},"content":{"rendered":"
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Long-term Treasury yields have been far lower than short-term Treasury yields for a year, as the Fed pushed up its short-term policy rates, but the Treasury market has refused to play along, and long-term Treasury yields have been slow in following. But this phenomenon is now facing massive headwinds.<\/span><\/p>\n

Markets are going to have to absorb a flood of Treasury bills (Treasury securities with maturities of one year or less) in the coming months, estimated at something close to $1 trillion, as the Treasury is trying to refill its depleted checking account, the Treasury General Account, while also covering higher outflows and lower tax receipts (we discussed this most recently here). This has been teased in a series of Treasury department announcements that keep getting worse.<\/p>\n

The net new issuance will pull liquidity out of other markets and put upward pressure on short-term Treasury yields and on other interest rates, including for CDs, as more and more buyers need to be found to buy these bills, and higher yields will do that.<\/span><\/p>\n

We knew that. And it\u2019s happening. Investors in bills and CDs are finally getting some yield, after 15 years of getting screwed.<\/p>\n

For example, today, the Treasury sold $162 billion in securities, of which $120 billion were Treasury bills with juicy yields:<\/p>\n