Econoday Report: 30-Year Bond Auction 8, 2006

2007 U.S. Economic Events & Analysis

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30-Year Bond Auction

Definition
Treasury bonds 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 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 30-year bond auction twice a year - on the first Wednesday of February and August. The bond is auctioned the following week, usually on Thursday and it is issued (settled) on the 15th of the month. If the 15th falls on a weekend or a holiday, it is issued on the next business day. After calling a hiatus in the issuance of 30 Year bonds in 2001, Treasury reinstituted them in February 2006 and followed with another auction in August. Plans are for four auctions in 2007. Why Investors Care

Yield Awarded

4.812 %

Highlights
The Treasury's quarterly refunding proved unusually successful, capped off by a strong 30-year bond auction that was awarded at 4.812 percent, nearly 2 basis points better than expectations. Bid-to-cover was strong at 2.46 vs. 1.77 at the last bond auction in August. Non-dealers showed strong interest, taking 42 percent of the offering.

Easing inflation pressures and a narrowing federal deficit, which implies smaller offerings in the future, are making Treasuries even more attractive to investors. Treasuries rallied sharply in initial reaction to the results.

Trends

This chart reflects the monthly average yields for 30-year bonds in the secondary market. These could be at slight odds with the auction averages in the primary market.

Data Source: Haver Analytics

2007 Release Schedule

Released On: 2/8 5/10 8/9 11/8

Released For: Feb May Aug Nov