Wednesday, January 7, 2009

T-Bills, T-Bills and more T-Bills!

A few months ago, in the comments over at Calculated Risk, Nemo started wondering just how many T-bills were being issued by the Treasury and also suggested that adding some charts to illustrate the horrors of issuance would be nice to have. I thought that was a pretty good idea too and decided that perhaps I could actually contribute something to the discourse beyond snark and bile. Over the next few months, I would wait for the Treasury to issue the monthly update and then I would update my spreadsheets. Since then, I started writing things here, so it seemed like a logical place to post them now. The chart to the above-right is the net t-bill issuance since April 2008. All told, between April 1st and December 31st, the Treasury issued $3.37T worth of t-bills. Fortunately, they did manage to at least retire some of them and the net issued as of December 31st was $1.866T. And that $1.866T is all due between January 1st and December 17th, 2009.

The treasury market is not really an area I know too much about and the following two charts are here more for sake of completeness of picture than anything else. The first contains small yield
curves over time. The second shows the falling yields across the curve moving towards the end of the year.

What does this all mean? I'm not really sure but I suspect it means that I don't want to be Obama or Geithner. Further, can the treasury market really digest $1.866T in issuance between now and the end of this year? Or is there another plan for all of these bills? Mr. Jansen at Across the Curve has made a few comments about this topic and today he notes about a failed 10-year Bund auction.

If all of this debt must be rolled, and if any stimulus package must necessarily be deficit spending, what are the impacts on yields? Once again, it should be an interesting year.