The United States may be hurtling headlong into a debt disaster, but that didn't seem to bother creditors today.
Sure, the national debt now exceeds $12 trillion, and simply servicing that mountain of IOUs is going to cost almost $1 trillion a year in a decade. Still, bidders today drove down the yield on two-year Treasury notes to an all-time low, as though the U.S. isn't facing a fiscal reckoning of seriously unpleasant proportions.
The yield on the $44 billion in notes was just 0.802%, down from 1.02% less than a month ago. The mounting debt and continuing weakness in the dollar doesn't seem to be dissuading foreign central banks from continuing to stockpile greenbacks, either. Indirect bidders bought 44.5% of the bonds, the same as at the Oct. 27 sale, and above the average for the past 10 note sales.
The Treasury is going to continue to push its luck this week, planning to sell $42 billion in five-year debt tomorrow and $32 billion in seven-year debt on Wednesday, before Timmy G. hits the bars in a big way on China's tab. Each part of this week's borrowing spree represents a record amount for each term.
Treasury Sells Two-Year Notes at Record Low Yield [Bloomberg]
Wave of Debt Payments Facing U.S. Government [NYT]