Econoday Report: 5-Year Note Auction 24, 2008

2008 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 primary dealers (as of November 30, 2007) 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. The 5-year notes are announced around the third week of the month (usually on Thursday) and then auctioned the following week (usually Thursday). The 5-year notes are issued (settled) on the last day 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

3.159 %

Highlights
April's 5-year note auction proved as weak as yesterday's 2-year auction proved strong. Auction size isn't entirely to blame either, since at $19 billion the size is well under the record $24 billion in the February 2003 5-year auction. One has to go back to that February 2003 auction to find a bid-to-cover ratio weaker than today's 1.65. The stop-out rate of 3.129 percent was nearly 4 basis points above the when-issued bid at the auction deadline with the spread between the median and low bids a very wide 11 basis points. Treasury yields rose in immediate reaction to the results which however do follow yesterday's strong $30 billion 2-year auction, a fact that will limit concern whether larger offering sizes, the result of the government's widening deficit, and the falling dollar are hurting demand for Treasuries.

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 Source: Market News International and Thomson Financial

2008 Release Schedule

Released On: 1/26 1/29 2/28 3/27 4/24 5/29 6/26 7/24 8/28 9/25 10/30 11/26 12/24

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