2017 Economic Calendar
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3-Yr Note Auction  
Released On 4/10/2017 1:00:00 PM For 4/10/2017 1:00:00 PM
Auction Results
Total Amount$24 B 
Coupon Rate1.500% 
Yield Awarded1.525% 

Results are soft for the monthly 3-year note auction, where coverage at 2.62 was the weakest since July 2009 and the bidding was somewhat sloppy, pushing up the high yield to the awarded 1.525 percent, about a half of a basis point above the 1:00 bid. Demand from end investors did materialize but was only average and in line with the generally softer interest seen this year at 3-year note auctions, with non-dealers taking down 60 percent of the $24 billion offering. Investors are apparently anticipating beefier yields ahead and were not enticed by the 1.525 percent high yield, which was 10.5 basis points below the previous month's auction rate.

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 notes, resell the notes 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 3-year notes are announced around the first week of the month (usually on Thursday) and then auctioned the following week. In all cases, the 3-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. (Department of the Treasury)  Why Investors Care

Data Source: Haver Analytics
When the 3-year note is higher than the fed funds rate, it usually suggests that fixed income investors are expecting the fed funds rate to rise. Conversely, when the 3-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. This chart shows the high yield awarded at monthly 3-year note auctions since February 2012 up to and including the latest auction results.
Data Source: Haver Analytics

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