Econoday Report: 3-Month Bill Auction 23, 2007

2007 U.S. Economic Events & Analysis

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3-Month Bill Auction

Definition
Treasury bills are sold at public auctions every week. The 3-month bill is also known as the 13- week bill. Competitive bids at these auctions determine the interest rate paid on each issue. Twenty-three primary dealers (as of July 2006) are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Since these are public auctions, the Treasury must announce the size, date and time of the auction every week. Three-month bills are announced on Thursday for auction the following Monday and are issued (settled) on Thursday. If a Monday is a banking holiday, the bills are auctioned on Tuesday. Why Investors Care

3-Month Bill Treasury Rate

4.885 %

Highlights
The 3-month bill was awarded at 4.885 percent, up 4.5 basis points from last week.

Trends

The 3-month bill rate is usually similar to the federal funds rate target; often when bond investors expect a rising rate environment, it is higher than the funds rate, but when investors expect rates to decline, it will be lower than the funds rate target. The 3-month bill rate depicted in this chart represents the high discount rate from the Treasury's weekly auction on Mondays. It only represents one moment in time, and is not an average of daily numbers. The date on the chart is associated with the issue (or settlement) date of the Treasury security, which is on the Thursday of the week that the security is auctioned. Our grid tables show the auction date of the security, which is usually on Mondays.

Data Source: Haver Analytics