Econoday Report: 30-Yr Bond Auction November 13, 2008

2008 Economic Calendar

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30-Yr Bond Auction

Released on 11/13/2008 1:00:00 PM For 11/13/2008 1:00:00 PM

Auction Results
Bid/Cover	2.07
Coupon Rate	4.500%
Total Amount	$10 B
Yield Awarded	4.310%

Highlights
Demand was poor for the Treasury's 30-year bond auction where the stop-out rate of 4.310 percent was nearly 10 basis points over the 1:00 bid. The bid-to-cover ratio was soft at 2.07. Reaction was swift as money moved out of the Treasury market in response.

Results of the quarterly refunding were mixed showing strong demand for Monday's 3-year note sale, mixed results for yesterday's 10-year auction and poor ones for the 30-year bond. Strong demand is a vital for the Treasury which is facing a mountain of borrowing needs.

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 17 securities dealers (as of June 18, 2009), known as 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 30-year note auction. Through 2008, the 30-year bond auctions had been quarterly. In 2009, the Treasury added more auctions that recur almost monthly to help fund the expanding federal deficit. The 30-year bonds are announced around the first week of the month and then auctioned the following week. Generally, the 30-year bonds 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. The issuance of new 30-year bonds went on hiatus in 2001 but the Treasury reinstituted them in 2006. (Department of the Treasury) Why Investors Care

Data Source: Haver Analytics

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