Econoday Report: 5-Year Note Auction 28, 2008

2008 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 primary dealers (as of November 30, 2007) 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. The 5-year notes are announced around the third week of the month (usually on Thursday) and then auctioned the following week (usually Thursday). The 5-year notes are issued (settled) on the last day 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

2.755 %

Highlights
It was mostly business as usual for the February 5-year Treasury note auction, showing a stop-out rate of 2.755 percent that is 1 full basis point below expectations. The bid-to-cover ratio was also positive, at 2.29 vs. 2.16 in January. But bidding by buyside accounts, such pension funds or insurance companies, appeared to be very soft as indirect bidders took down only 22 percent of the auction, well below a long-term average near 40 percent. The low buyside interest means dealers will be working hard to redistribute the issue among their customers.

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 | Consensus Data Source: Market News International and Thomson Financial

2008 Release Schedule

Released On: 1/26 1/29 2/28 3/27 4/24 5/29 6/26 7/24 8/28 9/25 10/30 11/26 12/24

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