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 (as of July 2006) 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 03/29/2006 Yield Awarded 4.785 % Highlights The U.S. Treasury auctioned $14 billion of 5-year notes today with a coupon rate of 4.75 percent and a high yield of 4.785 percent. The bid-to-cover ratio increased from the previous two auctions, but the high yield was somewhat higher than the WI trading yield of 4.779 percent. This means that the auction did not go as well as expected. Bond investors were disappointed with yesterday's post-FOMC meeting statement which did not state when the Fed would stop raising rates and was considered somewhat hawkish. The 4.75 percent coupon matches the current fed funds rate target of 4.75 percent. 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.