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-two primary dealers (as of August 2004) 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 5-year note auction monthly. Eight times a year, the 5-year notes are announced around the second week of the month (usually on Monday) and then auctioned two days later. In February, May, August and November, they are announced on the first Wednesday of the month and auctioned during the second week of the month (usually on Wednesday). In all cases, the 5-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. Released on 01/11/2006 Yield Awarded 4.370 % Highlights The U.S. Treasury auctioned $13 billion of 5-year notes today with a coupon rate of 4.25 percent and a high yield of 4.37 percent. Both the coupon rate and the high yield are down from the December levels. Interest rates have come down in the past few weeks as bond investors are becoming increasingly certain that the Fed will stop raising the fed funds rate target after the January 31 FOMC meeting. In fact, the FOMC minutes did not state that, but this is the market interpretation. Also, the middle of the yield curve has become inverted -- 5-year note yields are now lower than 2-year note yields. Trends This chart reflects the monthly average yields for 5-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.