In light of the 35 bps increase in yield being paid by the US Treasury in today’s 1 month bill auction vs the one sold last week, I want to emphasize that this hissy fit in the market is more due to worries about the timing of being paid back rather than anything else. This gets to my point this morning that the debt limit debate is noise because it will be raised as it always has been. Thus, buyers of bills will get paid back 100%, the US government guarantees it. It is just the timing that has some worried as obligations have to be met by maturing paper that is paid back on time. Thus, the one month bill is a bargain as it can be had at a yield that is not much different than a 2 yr note.
Today’s one month bill was auctioned off at 1.32% vs the current 2 yr yield of 1.30%.