The U.S. Treasury completed auctions for $95 billion in debt Thursday morning, just two days after auctioning off an additional $87 billion this week.
What Happened
The Treasury offered $35 billion in 56-day bills maturing on May 21 and $60 billion in 28-day bills maturing on April 23. The median rate on the 28-day bills was 2.42 percent, while the median rate on the 56-day bills was 2.40 percent.
Why It’s Important
Stock market investors have been watching the bond market closely for any signs of economic trouble on the horizon. Strangely enough, the bond market and the stock market have been giving investors mixed signals so far in 2019. Typically, falling bond yields and falling stock prices are indicators of fears about slowing economic growth.
On Wednesday, the Federal Reserve reiterated its plan to be patient on further rate hikes after getting some mixed data on the strength of the global economy, particularly in Europe and China.
The Fed lowered its economic growth forecast from 2.3 percent to 2.1 percent. It also said 2019 inflation rates will average 1.8 percent, down from 1.9 percent and below its 2 percent target. Finally, the new estimated unemployment rate is 3.7 percent, up from 3.5 percent in December.
According to CME Group, the bond market is pricing in a 59.6-percent chance the Fed’s target rate range of 2.25 percent to 2.50 percent will remain in place through the end of the year. The bond market is pricing in a 40.4-percent chance of an interest rate cut sometime in 2019.
What’s Next
The Treasury is set to action another $87 billion in 13-week and 26-week Treasury bills on March 25.
Ten-year treasury yields dropped to 2.52 on Thursday, their lowest level in over a year.
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