2008 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 primary dealers (as of November 30, 2007) 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
1.450 %

Highlights
The weekly 3-month and 6-month bill auctions were both sloppy once again, reflecting minute to minute swings in front-end rates that are a reflection of uncertainty in the credit market. Coverage for both auctions was on the soft side with stop-out rates well above rates on screens at the 1:00 p.m. ET deadline. Coverage for tomorrow's 4-week bill auction should be strong given the small offering size of $10 billion announced earlier this morning, an offering supplemented with $25 billion of 5-day cash management bills.

Trends
[grid]
[Chart] 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 | Consensus Data Source: Market News International and Thomson Financial

 
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