The latest debt-ceiling drama is over, and the floodgates are open for the U.S. Treasury to step up issuance. It’ll be up to bond traders this week to signal how much that extra supply will cost American taxpayers.

In a week shortened by the Presidents’ Day holiday on Feb. 19, the Treasury will pack in auctions totaling $258 billion. It begins with $151 billion of short-term bills, followed by a slate of two-, five- and seven-year maturities that’s $4 billion larger than last month.

It’s a lot for bond traders to chew on, especially after a bond-market rout pushed yields to multiyear highs last week. With little in the way of significant economic data ahead, the sales will provide the clearest gauge yet of just how steeply borrowing costs will need to rise as the U.S. debt burden swells.

“We’re going to have this theme for a while -- there’s a lot of issuance that has to come,” Jeff Rosenberg, chief fixed-income strategist at BlackRock Inc., said in a Bloomberg TV interview. “It’s not so much the demand -- it’s the demand at what price?”

The three- and six-month bill auctions this week will be the largest on record, at $51 billion and $45 billion, respectively. Investors are already demanding higher rates from borrowers across money markets, and that’s before the nation’s ballooning budget deficit causes even more short-term issuance later. Auctions are also rising as the Federal Reserve is moving to let bonds roll off its balance sheet.

The two-year yield reached 2.209 percent last week, the highest since 2008. The five-year yield, at 2.6849 percent, touched the highest since 2010. The seven-year yield hit 2.874 percent, the highest since 2011. Solely from that perspective, these auctions may present an opportunity to step up and buy, and there are some big investors saying yields may not go much higher. 

But that’s not exactly the consensus. The two-year yield will rise above 2.5 percent by year-end, according to a Bloomberg survey. That’s in part because a growing chorus expects the Fed to step up the pace of rate hikes in 2018 as government spending heats up the economy.

In a note Friday, BMO Capital Markets strategists offered some words of wisdom they’ve picked up along the way: “There is no such thing as a bad bond, just a bad bond price.”

The Treasury is about to embark on some major price discovery.

This article was provided by Bloomberg News.