2005 U.S. Economic Events & Analysis
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3-Year Note Auction
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. Twenty-two primary dealers (as of August 2004) are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold, resell, or trade the securities with other firms. Four times a year, the Treasury announces the amount, date and time of the 3-year note auction (usually the first Wednesday of February, May, August and November). These notes are usually auctioned during the second week of these months (often on Tuesday) and are issued (settled) on the 15th of the month. If the 15th falls on a weekend or a holiday, they are issued on the next business day. Why Investors Care

Yield Awarded
3.470 %

Highlights
The U.S. Treasury auctioned $22 billion of 3-year notes today with a coupon rate of 3.375 and an awarded yield of 3.47 percent. The bid-to-cover ratio was 2.01, a bit lower than the November auction, but on line with its long term average. The auction was expected to do well today, and indeed it did given that the WI trading rate was 3.491 percent and the awarded yield was about 2 basis points less than that. Yields are higher than the November auction because rates have generally picked up steam in the past few months -- at least at the short end of the yield curve.

Trends
[grid]
[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

2005 Release Schedule
Released On: 2/8 5/10 8/8 11/8
Released For: Jan Apr Aug Oct


 
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