The US Treasury sold $25 billion of one-year T-bills at an interest rate of 33bps yesterday, the highest since June 2010. It appears the short-end of the yield curve is increasingly pricing in 'liftoff' sooner rather than later (and the long-end is responding by rallying - lower in yield - as medium term growth expectations fade) but it raises significant questions about the economic trajectory after the hike (and the ebbing confidence in The Fed).
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This makes sense, given the majority now forecast a rate hike in September...
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Which raises the question - if everyone expects rates to go up 25bps in September and 1Y bills are at 33bps... is it one-and-done for The Fed as the market is pricing a return to economic weakness?
Charts: Bloomberg
