2007 U.S. Economic Events & Analysis
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30-Year Bond Auction
Definition
Treasury bonds are sold at regularly scheduled public auctions. The competitive bids at these auctions determine the interest rate paid on each Treasury note issue. Twenty-three primary dealers are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold, resell, or trade the securities with other firms. The Treasury announces the amount, date and time of the 30-year bond auction twice a year - on the first Wednesday of February and August. The bond is auctioned the following week, usually on Thursday and it is issued (settled) on the 15th of the month. If the 15th falls on a weekend or a holiday, it is issued on the next business day. After calling a hiatus in the issuance of 30 Year bonds in 2001, Treasury reinstituted them in February 2006 and followed with another auction in August. Plans are for four auctions in 2007. Why Investors Care

Yield Awarded
5.059 %

Highlights
Cash is in demand in Thursday's volatile market, not 30-year bonds. Today's auction of 29-3/4 year bonds came in way below expectations, showing a bid-to-cover of only 1.57 despite the pint-sized $9 billion offering size. The high yield of 5.059 percent was way outside of expectations and nearly 6 basis points over the when-issued note at the bidding deadline. Demand from non-dealers was scant as the group made up only 12 percent of competitive bids, well below the average of 33 percent. This auction was completely overshadowed by concern over liquidity in the banking system, triggered by BNP Paribas' decision to freeze deposits and withdrawals on three hedge funds. Treasuries dipped in initial reaction to the results, which however were posted at the same time rumors hit the market that another domestic hedge fund was liquidating positions.

Trends
[grid]
[Chart] This chart reflects the monthly average yields for 30-year bonds in the secondary market. These could be at slight odds with the auction averages in the primary market.
Data Source: Haver Analytics | Consensus Data Soruce: Market News International and Thomson Financial

2007 Release Schedule
Released On: 2/8 5/10 8/9 11/8
Released For: Feb May Aug Nov


 
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