2017 Economic Calendar
POWERED BY  econoday logo
U.S. & Intl Recaps   |   Event Definitions   |   Today's Calendar   |   

2-Yr Note Auction  
Released On 4/25/2017 1:00:00 PM For 4/25/2017 1:00:00 PM
Auction Results
Total Amount$26 B 
Coupon Rate1.250% 
Bid/Cover2.85 
Yield Awarded1.280% 

Highlights
Results are solid for the monthly 2-year note auction, where coverage at 2.85 was the best since May 2016 and the bidding was tight, pulling down the high yield to the awarded 1.280 percent, about a half of a basis point below the 1:00 bid. End investor demand for the 2-year note was the strongest in 8 months, with non-dealers taking down 70 percent of the $26 billion Treasury offering. The 1.280 percent high yield was 19 basis points higher than last month's 2-year auction yield and matched the longer term auction high yield peak set in December. Because the high yield fell within the range of 1.250 percent and 1.374 percent, the auction resulted in the unscheduled reopening of the 1.25 percent 7-year notes of Series K-2019, with CUSIP No. 912828ST8, rather than a new 2-year note with the previously announced CUSIP No. 912828X62 if it had been outside that range. These 7-year notes were originally issued on April 30, 2012, and have the same coupon, coupon payment date, and maturity date as the scheduled new 2-year note would have had.

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 2008 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. The 2-year notes are announced around the third week of the month (usually on Thursday) and then auctioned the following week. In all cases, the 2-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. (Department of the Treasury)hey are issued on the next business day. (Department of the Treasury)  Why Investors Care
 
[Chart]

Data Source: Haver Analytics
 
[Chart]
When the 2-year note yield is significantly higher than the federal funds rate, it suggests that bond investors are expecting the federal funds rate to rise. Conversely, when the 2-year note is lower than the fed funds rate, it suggests that investors are anticipating a rate cut -- or at least some stability in policy.
Data Source: Haver Analytics
 

powered by  [Econoday]