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. Twenty-three primary dealers are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold, resell, or trade the securities with other firms. The Treasury announces the amount, date and time of the 10-year note auction four times a year - on the first Wednesday of February, May, August and November. The note is auctioned the following week, usually on Thursday and it is issued (settled) on the 15th of the month. If the 15th falls on a weekend or a holiday, it is issued on the next business day. The U.S. Treasury also announces a re-opening* of the 10-year note at the beginning (usually the second week of the month) of March, June, September, and December. The 10-year note is then auctioned later in the week (usually on Thursday) and issued on the 15th of the month with the same exception if it is a weekend or holiday. **According to the Treasury, "In a reopening, we issue an additional amount of a previously-issued note. The reopened security has the same maturity date and interest rate as the original security; however, compared to the original security, the reopened security has a different issue date and usually a different purchase price. If the price determined at the reopening exceeds the par value of the security, you will owe a premium. Also, when buying a reopened security, you must pay the interest the security earned before you bought it; however, we will pay this interest -- it's called "accrued interest" -- back to you in your first semiannual interest payment." Released on 08/09/2006 Yield Awarded 4.930 % Highlights Demand proved solid for the Treasury's 10-year note auction with the high yield coming in at 4.930 percent, right in line with the when-issued note at the bidding deadline. Though coverage was on the soft side at 2.23, non-dealers showed solid interest as indirect bidders made up 30.3 percent of accepted competitive bids, vs. 30.7 percent and 40.8 percent at the May and February auctions -- the last auctions with full 10-year maturities (not reopenings of prior issues). Note that the high yield as well as the coupon, at 4.875 percent, are below the last two auctions -- a reflection of slowing economic growth that has eased the risk of inflation. Yesterday's FOMC decision to keep rates steady appears not to have raised significant concern over inflation pressures, which is a major risk for longer term maturities. But a greater test of inflation worries will be posed by tomorrow's 30-year bond auction. Trends This chart reflects the monthly average yields for 10-year notes in the secondary market. These could be at slight odds with the auction averages in the primary market. Data Source: Haver Analytics Consensus Data Source: Market News International Legal Notices | © 1998-2006 Econoday, Inc. All Rights Reserved.