The US Treasury sold $638 billion of Treasury bills across seven auctions this week, with three clearing above $100 billion each and a fourth at $99 billion, while the 10-year yield fell 10 basis points to 4.65% after the largest coordinated currency intervention in years. No auctions for notes or bonds were scheduled, leaving the bill market to absorb the entire weekly supply.

The auction calendar was all bills

Maturities ranged from one month to one year. The Treasury’s weekly refunding relied entirely on short-term paper, a pattern that has pushed total T-bills outstanding to $7.0 trillion at the end of July, up $1 trillion from a year earlier, according to the monthly Treasury statement. The auctions conducted this week are not yet reflected in that figure. Total marketable securities outstanding reached $31.4 trillion, a $2.5 trillion year-over-year increase, with bills holding a 22.2% share, essentially unchanged for nearly three years.

Yields unwound the July rate-hike premium

The 6-month bill auctioned Monday at an investment rate of 3.986%, down roughly 10 basis points from the pre-FOMC auction’s 4.08%. In the secondary market, the 6-month yield edged down 2 basis points to 3.96% by Friday afternoon. That leaves it 33 basis points above the effective federal funds rate at 3.63%, signaling the market has kept a September rate hike priced in but pushed the timing back from July.

The intervention that moved the long end

Longer yields declined after the Treasury and Japanese authorities intervened in currency markets, with the US selling euros and buying yen alongside Japan’s own yen purchases. The move was explicitly aimed at capping long-term Treasury yields by removing the risk that Japan would liquidate US securities to fund yen buying. The 10-year yield dropped 10 basis points on the week to 4.65%, a move the source attributes directly to the intervention.

The supply backdrop keeps growing

Treasury Secretary Bessent faces a dual supply surge: bills up $1 trillion year-over-year and total marketable debt up $2.5 trillion. The bill share has held steady near 22%, meaning the Treasury is not shortening duration, it is simply issuing more of everything. With inflation expectations still embedded in the curve, the higher yields the market now demands are the mechanism that lets bondholders absorb that supply without demanding still more compensation.