Today Treasury auctioned $37 billion in 5 yr securities at a 3.06 bid-to-cover resulting in a yield of 1.79%. Yesterday AT&T came to market with a $2.5 billion 5 yr offering with a 2.5% coupon representing a scant 77 bps above the comparative Treasury.

The tea leaves tell a variety of interesting stories. We’ll save those for another time. In the interim it’s interesting to note AT&T is taking advantage of the low rate environment to acquire a cheap source of capital. Uncle Sam should take note and come to market with a massive long-term debt offering with proceeds used to repurchase previously issued debt with higher coupon payments – a bit of a “back door refi” since Treasuries lack a call feature.