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

3.344 %

Highlights
Demand for U.S. Treasuries notes is very strong, judging from this week's 2- and 5-year auctions. Today's 5-year auction posted a solid bid-to-cover ratio of 2.46, down from 2.48 in last month's auction but against a very large $21 billion auction size. Indirect bidding, which offers a gauge of demand from non-dealers, was very strong with the group taking 33 percent of the auction vs. 21 percent in June's auction for the best percentage since March. The stop-out rate of 3.440 percent was right at the 1:00 p.m. ET bid of 3.436 percent. The Treasury market showed no reaction to the results which nevertheless are a big plus for all U.S. securities. The Treasury will announce details of its quarterly refunding on Wednesday.

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

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