2008 U.S. Economic Events & Analysis
Resource Center »  U.S. & International Recaps   |   Release Dates   |   Why Investors Care    |   Today's Calendar

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 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. 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
0.320 %

Highlights
The 4-week auction reveals more bad news about confidence in the credit markets. Stop-out rate was 0.320 percent, the lowest since the auction following the Lehman Brothers bankruptcy in mid September. Low bids once again were at zero. The huge $34 billion auction size did little to dilute demand with the bid-to-cover ratio of 2.80 just above last week's ratio for a $27 billion auction. There are signs of improvement in the bank lending market, including a lower effective fed funds rates and lower Libor rates, but demand for cash is as severe as ever reflected in the repo market which is as tight as ever.

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 | Consensus Data Source: Market News International and Thomson Financial

 
powered by [Econoday]
Legal Notices | © Copyright 2000 -2008 Econoday, Inc.