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2-Yr Note Auction  
Released On 6/26/2017 1:00:00 PM For 6/26/2017 1:00:00 PM
Auction Results
Total Amount$26 B 
Coupon Rate1.250% 
Bid/Cover3.03 
Yield Awarded1.348% 

Highlights
Results are solid for the monthly 2-year note auction, where coverage of 3.03 was the best since November 2015 and the bidding tight, pulling down the high yield to the awarded 1.348 percent, almost a basis point below the 1:00 bid. End investors turned out in full force, with non-dealers taking down 75 percent of the $26 billion offering, their largest share since May of last year. The awarded 1.348 percent high yield was 3.2 basis points above last month's rate and the highest awarded for the 2-year note since October 2008.

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
 
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Data Source: Haver Analytics
 
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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
 

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