Intro to U.S. Treasury Bond Auctions
What are Bond Auctions?
The U.S. government regularly issues debt (Treasury securities) to fund its operations. This is done through auctions conducted by the U.S. Department of the Treasury.
There are three main types of Treasury securities:
- Treasury Bills (T-Bills) – Short-term (4 weeks to 1 year), sold at a discount.
- Treasury Notes (T-Notes) – Medium-term (2, 3, 5, 7, 10 years), pay interest every 6 months.
- Treasury Bonds (T-Bonds) – Long-term (20 or 30 years), pay interest every 6 months.
Auctions are how the government sets the interest rate (or yield) that investors get in return for lending money.
Auction Schedule Basics
The Treasury operates on a predictable and recurring calendar:
| Security Type | Terms | Frequency | Example Days |
|---|---|---|---|
| T-Bills | 4, 8, 13, 26, 52 weeks | Weekly | Mondays & Thursdays |
| T-Notes | 2, 3, 5, 7, 10 years | Monthly | Usually mid-month |
| T-Bonds | 20, 30 years | Monthly | Often mid-month |
You can find the full official schedule here:
📅 https://home.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/auctionresults.aspx
How Do Auctions Work?
- Announcement: The Treasury announces an upcoming auction (amount, term, date).
- Bidding: Investors place competitive or non-competitive bids.
- Issuance: After the auction, securities are issued and settle shortly after.
Why Do Auctions Affect Markets?
While not always dramatic, bond auctions can impact equities (indices like S&P 500) because:
- A high yield means investors may shift from stocks to bonds (less risk, more return).
- A poor auction (low demand) may suggest weak confidence in the economy or concerns about debt.
- Bond yields are tied to interest rate expectations, which affect borrowing costs for companies and consumers.
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