Short-term US Treasury bills have surpassed the 4% yield threshold, marking a shift from the 3.7% to 3.9% range observed during the summer. By September 21, secondary market yields reached 4.084% for 3-month bills and 4.279% for 6-month bills.
During the September 14 auction, the Treasury sold $92 billion in 13-week bills at a rate of 4.066% and $79 billion in 26-week bills at 4.203%. Bid-to-cover ratios were 2.64x for 3-month bills and 2.74x for 6-month bills, reflecting market demand.
The rise in yields for 6-month bills from below 3.9% to over 4.2% occurred over approximately three weeks. This increase affects the cost of government borrowing and influences institutional investment strategies, as risk-free short-term returns become more attractive.
Money market funds, which hold significant volumes of Treasury debt, are expected to benefit from these higher yields. The current environment may discourage investors from moving capital into riskier assets while short-term instruments offer competitive returns.
