Treasury Yields Set to Climb as Issuance Floods Market and Short-Term Rates Surge

The US Treasury is set to issue a flood of Treasury bills, estimated at around $1tn, to refill its depleted checking account, the Treasury General Account, while also covering higher outflows and lower tax receipts. This will 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. Longer-term Treasury yields have been far lower than short-term Treasury yields for a year, but the Treasury will soon have to issue more longer-term debt (notes and bonds) by increasing the auction sizes, to keep the proportion of Treasury bills in its pile of total marketable securities from ballooning out of whack.