2018 Economic Calendar
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2-Yr Note Auction  
Released On 8/27/2018 1:00:00 PM For 8/27/2018 1:00:00 PM
Auction Results
Total Amount$36 B 
Coupon Rate2.625% 
Bid/Cover2.89 
Yield Awarded2.655% 
CUSIP Number9128284Y3 
Originally Announced CUSIP9128284Y3 

Highlights
Results are mostly solid for the monthly 2-year note auction, where coverage, at 2.89 was above the average this year and the bidding was on the screws, keeping the high yield at the awarded 2.655 percent, in line with the 1:00 bid. But end investor demand was only moderate, with non-dealers taking down 58 percent of the $36 billion offering, near the low end of their takedown range this year though above the long-term average. The 2.655 percent high yield was 0.2 basis points below last month's awarded rate.

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 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 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)  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. The chart shows the high yield awarded at monthly 2-year note auctions since January 2012, up to and including the latest auction results.
Data Source: Haver Analytics
 

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