US Government Borrows a Record $839 Billion in One Week of Treasury Auctions
The US government just borrowed more money in a single week than ever before.
Per Bloomberg, the Treasury raised $839 billion this week through its sales of Treasury bills and notes, a new all-time record for gross issuance in one week.
The borrowing serves two purposes: repaying holders of maturing debt as it comes due, and raising the additional capital needed to finance the federal deficit.
Breaking down the $839 billion
The $839 billion is the combined size of 11 auctions held this week, spanning bills, floating-rate notes and notes due in two, five and seven years.
This week's auctions of bills, floating-rate notes and notes due in two, five and seven years eclipsed the previous record of $834 billion, set in the same period a year ago.
The coupon sales alone totaled $213 billion, including $69 billion of 2-year notes, $70 billion of 5-year notes and $44 billion of 7-year notes, per the TreasuryDirect auction schedule.
The week's final coupon sale, $44 billion of 7-year notes on Thursday, went off at a high yield of 4.894%, with a bid-to-cover ratio of 2.46, up from 2.42 at the previous sale, per TreasuryDirect results.
Most of it is rollover, not new debt
The headline number overstates the fresh borrowing. The majority of the $839 billion went to repay holders of maturing bills, and only $106 billion represented new cash raised by the government.
That net figure is far below the pandemic-era peak. In March and April 2020, weekly net cash raised by the Treasury hit nearly $362 billion as auction sizes surged to fund the emergency response.
The risk traders are watching
Record gross supply still matters for markets, even when most of it refinances existing debt, because investors must absorb the auctions at clearing yields.
"The Treasury's weekly total debt issuance reaching a record high is certainly not a good sign. The biggest risk is that investors may demand higher yields," said Tony Fallon of Mischler Financial Group's interest rate sales and trading division, per Jin10.
The heavy calendar also landed in a crowded week, with the Federal Reserve's October rate decision and fresh GDP and PCE inflation data competing for investors' attention.
Total public debt outstanding stood at $40.44 trillion as of October 22, per Treasury data, with $32.60 trillion of that held by the public.
What to watch in rates
Bond traders will read this week's record supply through the long end of the curve. Watch TLT for long-duration exposure, IEF for the intermediate part of the curve, and SHY at the front end, alongside bill funds like SGOV.
Rate-sensitive equities also stay in focus when issuance runs at record pace, including homebuilders like XHB and utilities in XLU.
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