Econoday Report: 5-Year Note Auction 30, 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

4.248 %

Highlights
Not quite as strong as yesterday's 2-year note auction, today's $13 billion 5-year auction nevertheless did attract strong demand. Bid-to-cover was a very strong 2.74, well above June's 2.15 and the highest since September. But interest was centered at dealers with non-dealers making up only 23 percent of accepted competitive bids, above July but well below the long term average of 34 percent. Awards to non-competitive bidders were heavy, at $197 million vs. $121 million in July to indicate, like yesterday's 2-year note auction, flight-to-safety demand from individual investors. High yield of 4.248 percent was right at expectations. Treasuries showed little 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

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