Econoday Economic Report: 30-Yr Bond Auction November 8, 2012

2012 Economic Calendar

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30-Yr Bond Auction

Released On 11/8/2012 1:00:00 PM For 11/8/2012 1:00:00 PM

Auction Results
Bid/Cover	2.77
Coupon Rate	2.750%
Total Amount	$16 B
Yield Awarded	2.820%

Highlights
Following yesterday's mixed results for the 10-year auction, results for this month's 30-year bond auction are very strong. Coverage of 2.77 is the strongest of the year. The high yield of 2.820 percent is more than 3 basis points under expectations which is a sign of tight bidding. The dealer takedown of 42 percent of the $16 billion offering is low and points to active bidding from buy-and-hold accounts. Demand for Treasuries is rising following today's results.

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 A group of securities dealers, known as primary dealers, 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. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the recent financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here: http://www.newyorkfed.org/markets/pridealers_current.html The Treasury announces the amount, date and time of the 30-year note auction. Through 2008, the 30-year bond auctions had been quarterly. In 2009, the Treasury added more auctions that recur almost monthly to help fund the expanding federal deficit. The 30-year bonds are announced around the first week of the month and then auctioned the following week. Generally, the 30-year bonds 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. The issuance of new 30-year bonds went on hiatus in 2001 but the Treasury reinstituted them in 2006. (Department of the Treasury) Why Investors Care

Data Source: Haver Analytics

This chart reflects the monthly average yields for 30-year bonds in the secondary market. These could be at slight odds with the auction averages in the primary market.
Data Source: Haver Analytics