Econoday Report: 5-Year Note Auction 10, 2005

2005 U.S. Economic Events & Analysis

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5-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. The Treasury announces the amount, date and time of the 5-year note auction monthly. Eight times a year, the 5-year notes are announced around the second week of the month (usually on Monday) and then auctioned two days later. In February, May, August and November, they are announced on the first Wednesday of the month and auctioned during the second week of the month (usually on Wednesday). In all cases, the 5-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. Why Investors Care

Yield Awarded

4.223 %

Highlights
Results were mixed for the Treasury's monthly five-year note auction, this month part of the Treasury's quarterly refunding. The August 5-year note was sold at a high yield of 4.223%, right at the when-issued note at the bidding deadline. The bid-to-cover was very strong at 2.92.

But interest from indirect bidders, at 21.8%, was well under the long-term average of 38.3% -- indicating that dealers are holding a large share of the issue. Bonds dipped back in reaction to the results which however won't cast a shadow on tomorrow's 10-year auction, an issue that's especially popular.

Trends

This chart reflects the monthly average yields for 5-year notes in the secondary market. These could be at slight odds with the auction averages in the primary market.

Data Source: Haver Analytics

2005 Release Schedule

Released On: 1/12 2/9 3/9 4/13 5/11 6/8 7/13 8/10 9/7 10/12 11/9 12/7

Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Oct Oct Nov