Econoday Report: 5-Year Note Auction 22, 2007

2007 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-three primary dealers (as of July 2006) 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

4.719 %

Highlights
Today's 5-year note auction wasn't as aggressively bid for as recent Treasury auctions, including yesterday's 2-year note offering, but results still showed solid demand. The bid-to-cover ratio of 2.43 was strong for the $13 billion offering, an average size for a 5-year auction. But demand was centered among dealers, not among non-dealers such as insurance companies and pension funds. Non-dealers were awarded only 27 percent of the offering, up from 22 percent in the January offering but below the long-term average of 36 percent. High yield was 4.719 percent, right at expectations. The Treasury market showed no initial reaction to the results.

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 | Consensus Data Soruce: Market News International and Thomson Financial

2007 Release Schedule

Released On: 1/25 2/22 3/29 4/26 5/30 6/27 7/26 8/30 9/27 10/25 11/29 12/27

Released For: Dec Jan Feb Mar May Jun Jun Aug Aug Sep Oct Dec