The Treasury is scheduled to hold an auction on Tuesday, February 7, for six- and twelve-month bills. This debt instrument has gained appeal among retail investors who find it highly profitable and are increasingly drawn to short- and mid-term government securities since the start of 2022.
Currently, the marginal yield for six- and twelve-month bills sits near 3%, drawing attention from individual investors. In the most recent issue of these maturities, the marginal rate reached 2.599% for six-month terms and 2.998% for twelve-month terms, marking their highest levels since August 2012. Shorter quarterly bills yield around 2.198%, while nine-month notes hover near 2.839%.
As of Tuesday, February 7, applicants will need to place an order through Direct Accounts. Long lines observed at the Bank of Spain’s headquarters reflect strong demand for government securities amid their favorable returns.
Purchases can also be made through the Treasury’s securities trading service on its website, or via financial institutions, including banks, savings banks, and securities firms and agents.
Small savers are often not economists, yet they know where to invest. Demand for Treasury bonds is rising as banks offer lower yields, inflation erodes savings, and the safety of public debt remains appealing for cautious investors. Professor of Business and Management at VIU, Thomas Gomez, notes that ordinary savers recognize the stability and predictable income that Treasury notes provide. (Attribution: VIU – Thomas Gomez)
Profitability Exceeds 3.5%
The Treasury returns to the markets on Tuesday after a February kickoff that saw 6.499 billion euros issued across four references at higher rates. In particular, 20-year government bonds posted a yield above 3.5% in that session, highlighting ongoing demand for longer durations. (Attribution: Official Treasury Summary)
This activity occurs amid a backdrop of continued rate adjustments by major central banks. The European Central Bank recently raised its refinancing rate by 50 basis points to 3.0%, with the deposit facility at 2.5% and the loan facility at 3.25%. In the United States, the Federal Reserve confirmed a 25-basis-point increase, placing policy targets at 4.0% to 4.75% range. These moves influence bond prices and capital flows worldwide. (Attribution: ECB and Fed policy statements)
Rising rates push bond values lower while attracting foreign and domestic capital, a dynamic that also affects exchange rates. Experts observe that a portion of international capital movements stems from these rate shifts, shaping currency markets and investment strategies. (Attribution: Market Analysis Reports)
2023 Treasury Targets
The 2023 General Government Budget outlines gross issuance from the Treasury at 256.93 billion euros, reflecting an 8.2% rise over 2022 expectations due to higher rates. Net debt for 2023 is projected to hold around 70.0 billion euros, with Treasury Bills contributing approximately 5.0 billion euros of net negative financing. The remaining funding comes from government bonds and other liabilities across euro and foreign currencies. (Attribution: 2023 General Government Budget)
Overall, the Treasury plans to balance new issuances with existing debt obligations while navigating varying interest rates and market demand. Investors continue to monitor policy signals, inflation trends, and central-bank communications to gauge future opportunities in government securities. (Attribution: Treasury Market Commentary)