What happened to all the talk about a rapid rise in interest rates? A Treasury bill auction today went off that effectively lends the U.S. government money for free. This was a four-week T-Bill auction of $20 billion and the zero coupon bill went off at a price of Par (or $100.00), which is a zero percent yield.

Loaning money to anyone usually comes with interest of some sort. What is amazing is that the bid to cover was also up at about 5.4. This is the highest bid to cover since late in 2011 and this zero percent yield has not been seen for close to 18 months.

One driving force behind today’s no interest auction was that the $20 billion in size was only about half of the normal Treasury bill auction size. Perhaps all those tax receipts really are offering some cover against the government needing to sell more and more debt.

Primary dealers bidding for their own house accounts absorbed some $16.45 billion of the accepted bids. Direct bidders (non-primary dealers and individuals) were $1.27 billion and indirect bidders (foreign governments and foreign banks) were $2.03 billion of the accepted bids.

The U.S. Debt Clock shows total U.S. national debt at $16.84 trillion. Imagine lending even the U.S. government money just for the privilege of getting that money back in 30 days.

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