2017 Economic Calendar
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3-Yr Note Auction  
Released On 8/8/2017 1:00:00 PM For 8/8/2017 1:00:00 PM
Auction Results
Total Amount$24 B 
Coupon Rate1.500% 
Bid/Cover3.13 
Yield Awarded1.520% 

Highlights
Results are solid for the monthly 3-year note auction, where coverage of 3.13 was the best since December 2015 and the bidding tight, pulling down the high yield to the awarded 1.520 percent, about a basis point below the 1:00 bid. Exceptionally strong demand from end investors was evident, with non-dealers taking down 74 percent of the $24 billion offering, their largest share since November 2009. The 1.520 percent high yield was 5.3 basis points below last month's auction rate and 11 basis points short of the long term peak set in the March auction, where the 1.630 percent high yield was the highest awarded since April 2010.

Definition
Treasury notes are sold at regularly scheduled public auctions. The competitive bids at these auctions determine the interest rate paid on each Treasury note issue. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. The 3-year notes are announced around the first week of the month (usually on Thursday) and then auctioned the following week. In all cases, the 3-year notes are issued (settled) on the 15th of the month, unless it falls on a weekend or holiday, and then they are issued on the next business day. (Department of the Treasury)  Why Investors Care
 
[Chart]

Data Source: Haver Analytics
 
[Chart]
When the 3-year note is higher than the federal funds rate, it usually suggests that bond investors are expecting the federal funds rate to rise. Conversely, when the 3-year note is lower than the fed funds rate, it suggests that investors are anticipating a rate cut -- or at least some stability in policy. This chart shows the average monthly 3-year note yield, not the latest auction results.
Data Source: Haver Analytics
 

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