2017 Economic Calendar
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10-Yr Note Auction  
Released On 9/12/2017 1:00:00 PM For 9/12/2017 1:00:00 PM
Auction Results
Total Amount$20 B 
Coupon Rate2.250% 
Bid/Cover2.28 
Yield Awarded2.180% 

Highlights
Results are soft for the monthly 10-year note, where coverage, at 2.28 was near the bottom of the year's range and the bidding sloppy, taking the high yield up to the awarded 2.180 percent, nearly a full basis point above the 1:00 bid. Judging from the 61 percent non-dealer takedown, the lowest since November, end investor demand was even weaker than in last month's auction, which also had all the other symptoms of the weakness seen today. The 2.180 percent high yield was 7 basis points below last month's rate.

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. The level of demand for an auction is measured by coverage which is the ratio of bids tendered to bids accepted. The higher this number, the stronger the demand. 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 Treasury announces the amount, date and time of the 10-year note auction monthly. The 10-year notes are announced around the first week of the month and then auctioned the following week. Generally, the 10-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]
Between 2000 and 2011, the spread between the 10-year note and the federal funds rate averaged 173 basis points. More recently, in 2009 this spread grew to 310 basis points on fears of excess supply from financing the jump in the federal deficit but slipped to 304 basis points in 2010 and to 268 basis points in 2011. Essentially, a stronger economy and some reversal of flight to safety pushed rates back up in early 2011. However, in mid- 2011, the economy slowed and sovereign debt worries returned. A hefty decline in equities also added to flight to safety at mid-year though stocks bounced back later in the year, reflecting partial reversal of flight to safety. This chart shows the average monthly 10-year note yield, not the latest auction results.
Data Source: Haver Analytics
 

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