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
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Highlights
Boosted by surging tax receipts, the Treasury's surplus in April proved higher than expected at $177.7 billion. The Treasury's deficit so far this fiscal year is well under a year ago, at $80.8 billion vs. 184.1 billion. Solid profit job growth has boosted individual tax receipts by a year-to-date 17.3 percent year-to-date, while solid profit growth has boosted corporate tax receipts by 15.2 percent. Total receipts are up 11.2 percent against a year-to-date increase of only 3.2 percent for outlays.
The easing in the nation's fiscal deficit is welcome news for sure, but how long it lasts is another question given the slowdown in economic growth. Data this morning showed a higher-than-expected trade imbalance, a reminder that the nation still depends on foreign investment to fund its debt. Treasury International Capital, which tracks foreign investment, will be released on Tuesday.
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