U.S. short-term debt sale sees ho-hum demand

Mon Jul 19, 2004

NEW YORK, July 19 (Reuters) - A U.S. government sale of new short-term debt on Monday met with average demand, partly due to the decline in yields over the last week that has made Treasuries pricier across the curve.

The new three-month T-bills went for a high yield of 1.33 percent, largely in line with the yields achieved at the weekly sales over the last month, while dealers bid for twice the $18 billion on offer.

The bid-to-cover ratio fell below this year's average of 2.14 and was the lowest in three weeks.

Current three-month T-bills (US3MT=RR: Quote, Profile, Research) were last trading at 1.33 percent, showing a 2.0-basis point fall on levels seen late on Friday.

The Treasury's sale of $16 billion in new six-month bills achieved a high yield of 1.65 percent, and a bid to cover ratio of 1.96 times, making this the strongest showing since late June, but still below this year's average bid-to-cover of 2.17.

Six-month yields (US6MT=RR: Quote, Profile, Research) were last trading at 1.66 percent, down half a basis point from Friday.

Participation by primary dealers and indirect bidders -- which include all customers of primary dealers as well as foreign central banks -- was line with the average level of bidding seen from these investors this year.

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