Interest rate “spikes” last week hit the most important of the shortest-term Treasury Bills, indicating the Treasury strategy of Secretary Scott (Lord) Bessent—of pouring out debt that matures and is rolled over in just a matter of weeks—is running into danger. In the week including national debt issuance on June 18-19, the interest rate on 1-year Bills rose by .016% (called 16 “basis points") in one day, and is up 60 “basis points” or 0.6% since February. The rate on the 6-month Treasury Bill spiked by 10 basis points the same day; Both of these short-term debt securities have now “taken back” the last three rate cuts made by the Federal Reserve to the Federal Funds Rate, stretching over the past year.
In total, the Treasury issued $518 billion over those two days; but in the prior week, on June 11-12, it had issued more than $100 billion more than that, without causing the short-term rates to spike in this way. And that spike defied oil prices, which fell significantly during this just-ended week.
Besides these rollover issuances, there was $41 billion added to total national debt by the issuance of long-term securities. Their interest rates did not rise, showing the fantasies of loans and riches that Wall Street labors under when thinking about rates ten or 30 years in the future.
