U.S. Treasury Three-Year Note Yield Falls to 1.562% at Auction

(Bloomberg) -- The U.S. Treasury Department sold $38 billion of three-year notes at a yield of 1.562 percent, the lowest since Sept. 2017, as demand rose relative to the last auction of securities with the same maturity.

The bid/cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, rose to 2.41 from 2.39 at the last auction, indicating stronger demand.

Indirect bidders, a group that includes foreign central banks, bought 46.7 percent of the amount sold, compared with 48.5 percent in the prior auction. Primary dealers bought 34 percent, compared with 33.6 percent in the previous sale. Direct bidders purchased 19.3 percent.

At the past six auctions of three-year notes, bids were received for 2.49 times the amount of notes being sold, on average. In when-issued trading before the sale, the notes yielded 1.56 percent to 1.56 percent.

The yield on the three-year notes sold today was the lowest since 1.433 percent in Sept. 2017. At the July auction, the notes yielded 1.857 percent.

In financial market trading after the auction, the benchmark 10-year note yielded 1.74 percent. In market trading, the two-year note yielded 1.62 percent.

Auction Details

At today’s auction, 52.08 percent of the bids were allotted at the high yield of 1.562 percent. The low yield submitted was 1.088 percent, the median yield was 1.53 percent, and the coupon rate was 1.5 percent. The price was 99.818980.

Tenders totaled $91,590,002,800 and the Treasury accepted $38,000,002,800 of the bids. Competitive bids awarded totaled $37,953,300,000. Non-competitive bids awarded -- including those sold directly to individual investors -- totaled $46,702,800.

The three-year notes will be issued or settle Aug. 15 and mature Aug. 15, 2022. The CUSIP number on the bills is 912828YA2.

The minimum amount for Strips was $100.

Strips stands for Separate Trading of Registered Interest and Principal of Securities. Coupons are separated from a note or bond and become a security. The remaining face value bond becomes another security that is known as a zero-coupon bond.

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