Econoday Report: 5-Year Note Auction 26, 2007

2007 U.S. Economic Events & Analysis

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5-Year Note Auction

Definition
Treasury notes 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 (as of July 2006) 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 5-year note auction monthly. Eight times a year, the 5-year notes are announced around the second week of the month (usually on Monday) and then auctioned two days later. In February, May, August and November, they are announced on the first Wednesday of the month and auctioned during the second week of the month (usually on Wednesday). In all cases, the 5-year notes are issued (settled) on the 15th of the month, unless it falls on a weekend or holiday, and then they are issued on the next business day. Why Investors Care

Yield Awarded

4.640 %

Highlights
The monthly 5-year auction was on the weak side. The bid-to-cover for the $13 billion offering, the same auction size it's been all year, was 2.15 vs. 2.73 in June. Indirect bidders, which include buy-and-hold accounts, were awarded only 20 percent of the auction vs. a long-term average of 35 percent. The high yield of 4.640 percent was about 1-1/2 basis points above expectations. Not helping demand was supply earlier in the week: a well received 20-year TIPS auction and a 2-year auction that showed mixed results. The Treasury market, benefiting today from a new round risk aversion, showed no reaction to the results.

Trends

This chart reflects the monthly average yields for 5-year notes in the secondary market. These could be at slight odds with the auction averages in the primary market.

Data Source: Haver Analytics

2007 Release Schedule

Released On: 1/25 2/22 3/29 4/26 5/30 6/27 7/26 8/30 9/27 10/25 11/29 12/27

Released For: Dec Jan Feb Mar May Jun Jun Aug Aug Sep Oct Dec