Demand for 3-month US Treasury bills falls to weakest level since 2024.

At a time when there is uncertainty in the path of the Federal Reserve's monetary policy and the issuance size has reached record highs, demand for the 3-month Treasury bill auction conducted by the US Treasury on Monday weakened, with the indirect bidders receiving the lowest allocation in over a year and a half. The US Treasury issued $92 billion in 3-month Treasury bills, with a highest bid rate of 3.74%, the highest since November; the bid rate for the $72 billion 6-month Treasury bills was 3.84%. In the issuance of the 3-month Treasury bills, the allocation to indirect bidders was only 41%, the lowest since November 2024. In the 6-month issuance, the allocation to indirect bidders was 56.4%, lower than the three-month average of 63.1%. "The record high auction size this week may be one of the reasons for the weak auction results, but the increase in size is not enough to fully explain this result," wrote John Canavan, analyst at Oxford Economics, in his report. "Expectations of a Fed rate hike have fluctuated significantly since the FOMC decision, but have dropped by about 15 basis points from a week ago, which is also not enough to explain why demand is so weak today."