2018 Economic Calendar
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3-Yr Note Auction  
Released On 4/10/2018 1:00:00 PM For 4/10/2018 1:00:00 PM
Auction Results
Total Amount$30 B 
CUSIP Number9128284G2 
Originally Announced CUSIP9128284G2 
Coupon Rate2.375% 
Bid/Cover2.85 
Yield Awarded2.450% 

Highlights
Results are soft for the monthly 3-year note auction, where coverage, at 2.85, was the weakest since November and the bidding sloppy, pulling up the high yield to the awarded 2.450 percent, about a half of a basis point above the 1:00 bid. While end investor demand was only slightly weaker than in the prior two auctions, non-dealers took down just 59 percent of the $30 billion offering, the smallest share since December 2016. The 2.450 percent high yield was 1.4 basis points above last month's rate and the highest awarded since 2008.

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 securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. The 3-year notes are announced around the first week of the month (usually on Thursday) and then auctioned the following week. In all cases, the 3-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. (Department of the Treasury)  Why Investors Care
 
[Chart]

Data Source: Haver Analytics
 
[Chart]
When the 3-year note is higher than the fed funds rate, it usually suggests that fixed income investors are expecting the fed funds rate to rise. Conversely, when the 3-year note is lower than the fed funds rate, it suggests that investors are anticipating a rate cut -- or at least some stability in policy. This chart shows the high yield awarded at monthly 3-year note auctions since February 2012 up to and including the latest auction results.
Data Source: Haver Analytics
 

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