U.S. 1-month T-bill rates turn negative before auction

NEW YORK Mon Jan 13, 2014 3:00pm EST

Related Topics

NEW YORK Jan 13 (Reuters) - Interest rates on U.S. one-month Treasury bills fell below zero mid-afternoon Monday as traders scrambled for dwindling supply of these ultra short-dated debt in advance of a $15 billion auction of one-month bill supply on Tuesday, analysts said.

The Treasury Department earlier said it will sell $15 billion of T-bills due on Feb. 13, compared with the $18 billion of this T-bill maturity last week.

Tuesday's one-month auction size matched the one last seen on April 27, 2010.

Analysts have anticipated a reduction in T-bill supply as the Treasury Department gears up for the introduction of a two-year floating-rate note issue later this month and less short-term borrowing needs due to higher receipts.

The U.S. government said on Monday it last month booked the largest budget surplus for any December on record, boosted by payments from government-controlled housing finance agencies Fannie Mae and Freddie Mac.

On the open market, the interest rate on T-bills due Feb. 6 was last quoted at minus 0.5 basis point to plus 0.5 basis point. It ended at 1 basis point on Friday, according to Tradeweb.

In "when-issued" activity, traders expected the interest rate on the upcoming one-month T-bill supply to sell at an interest rate of minus 0.25 basis point to plus 0.25 basis point.

FILED UNDER: