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 03/09/2006 Yield Awarded 4.760 % Highlights The U.S. Treasury auctioned $8 billion of 10-year notes today with a coupon rate of 4.5 percent and a high yield of 4.76 percent. (Actually, it was a reopening of the February auction so that the security is actually 9 years 11 months.) The auction went relatively well: expectations centered around a 4.765 and 4.76 yield with some bond traders expecting as high as 4.77 percent on the yield. WI trading (trading before the note is auctioned) had the yield at 4.758 percent. The demand for this issue was good with a bid-to-cover ratio of 2.87, its highest level since August 2004. This is due, no doubt, to the rising 10-year note yield to its highest level (at auction) since June 2004 when it went at 4.828 percent. Just minutes before the final auction results were reported, New York Fed President Tim Geithner was speaking and commenting on the fact that long term rates are too low and not reflecting the massive government borrowing because foreigners are sopping up our securities. It is making monetary policy more difficult and the low long rates are overly accommodative. 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.