2007 U.S. Economic Events & Analysis
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4-Week Bill Auction
Definition
Treasury bills are sold at public auctions every week. 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. Four-week bills are announced on Monday for a Tuesday auction and are issued (settled) on Thursday of the same week. If a Monday is a banking holiday, the bills are auctioned on Wednesday. Why Investors Care

4-Week Bill Treasury Rate
3.680 %

Highlights
Demand was strong once again for the Treasury's weekly 4-week bill auction, showing a bid-to-cover ratio of 2.36 despite a jumbo $28 billion offering size. But the latest bid-to-cover is lower than last week's 2.68 ratio which was also for a $28 billion offering. Unusually high bid-to-cover ratios in prior weeks led to the increased offering sizes of the last two weeks. Uncertainty is still extremely high in the credit markets, a fact that points to large auction sizes for T-bills in the weeks ahead. The rate on the 3-month bill has dropped 15 basis points through this morning to a low of 3.15 percent.

Trends
[grid]
[Chart] The 4-week note was instituted to replace the necessity for sporadic cash management bills. This weekly auction is more predictable for investors. Predictability in the Treasury market is a highly rate feature that promotes demand for these bills. The 4-week bill rate depicted in this chart represents the high discount rate from the Treasury's weekly auction on Tuesdays. 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 Tuesdays.
Data Source: Haver Analytics

 
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