With the federal budget deficit deepening more rapidly than predicted, the Treasury has begun to change its security auctions.
For instance, Tuesday it will sell $22 billion in five-year notes, an increase from its sales of $16 billion in February and $11 billion last August. In addition, it will sell $11 billion in 10-year notes Wednesday.
Since the five-year-note auction will be so large, it will not be a reopening of the February issue, as it would have been in the past. And the Treasury is studying whether to drop its practice of reopening 10-year note issues as well.
The Wednesday sale will be a reopening of the one in February. Analysts said increasing the size of the five-year-note auctions probably will raise their yields compared with those of two-year notes.
On Monday, the Treasury will sell $15 billion each in three- and six-month bills, followed by the two note auctions Tuesday and Wednesday. In when-issued trading Friday, the bills yielded 1.76% and 1.88% and the notes 4.45% and 5.08%, respectively. Also Monday, the Treasury will announce details of an auction of four-week bills to be held Tuesday.