Reading the numbers: a Treasury Discount Bill auction resultHow the government borrows for three months, and how price relates to yield
The auction result for Treasury Discount Bills (1,417th issue), published by the Ministry of Finance on November 6, shows bids of JPY 10.3471 trillion against JPY 2.38329 trillion accepted, at an average price of 99.6679 yen (a yield of 1.2410 percent). This is how the government borrows for a few months at a time, and few figures are published. Two habits are enough to read it: the ratio of bids to the amount accepted, and the direction in which price and yield move.
Key points
- The auction was held on November 6, 2026 and the bills mature on February 15, 2027: a short instrument that runs about three months, from November to February
- Bids totalled JPY 10.3471 trillion and the accepted amount was JPY 2.38329 trillion. Bids were about 4.3 times the amount accepted, so demand far exceeded what was actually issued
- The average price of 99.6679 yen is below 100 yen. The gap of about 0.33 yen against the 100 yen repaid at maturity is what stands in place of interest, so the return is received differently from a bond that carries a separate coupon
- The yield at the average price is 1.2410 percent, and at the lowest accepted price of 99.6660 yen it is 1.2481 percent. The lower the price, the higher the yield: price and yield move in opposite directions
- The two prices differ by just 0.0019 yen, yet the yields differ by 0.0071 percent. On short instruments, a tiny difference in price shows up as a difference in yield
What to do in practice
- Put the rate on your short-term borrowing and your deposit rates beside the Treasury Discount Bill yield for the same period, to gauge the level of short-term rates
- When you read that bond prices have fallen, get into the habit of reading it as yields having risen
Treasury Discount Bills are what the government issues when it needs to borrow for only a short time. The batch settled by auction on November 6 is to be repaid on February 15, 2027, and was bought at an average price of 99.6679 yen. Because you pay less than 100 yen for something that returns 100 yen, that gap is the interest you receive. The cheaper you buy, the bigger your return as a share of what you paid.
- Amount received at maturity
- 100.0000 yen
- Average price paid
- 99.6679 yen
- Gap (what stands in place of interest)
- about 0.33 yen
Points
- Treasury Discount Bills are how the government borrows for only about three months
- You pay less than 100 yen for something that comes back as 100 yen. That gap stands in place of interest
- The lower the price, the higher the yield. Price and yield move in opposite directions
What the words mean
- Treasury Discount Bill
- A bill the government issues to borrow for a short time. This batch is to be repaid on February 15, 2027
- yield
- How much you receive in a year, as a share of the money you put in
- auction
- A way of deciding who buys, in which buyers each state a price and an amount
- Ministry of Finance (MOF): Ministry of Finance: Auction result for Treasury Discount Bills (1,417th issue)
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