U.S. Treasury 7-Year Notes Yield 2.235% at Auction

The U.S. Treasury Department sold $29.000 billion of seven-year notes at a yield of 2.235 percent, as demand fell 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, fell to 2.48 from 2.57 at the last seven-year note sale, indicating weaker demand. The bid/cover ratio was the lowest since 2.44 at the June auction.

The yield was higher than the 2.222 percent traders forecast in a Bloomberg News survey before the auction. After today’s sale, the benchmark 10-year note yielded 2.52 percent.

The yield was the highest since the July auction’s 2.25 percent, the Treasury said. At the previous auction, the notes yielded 2.045 percent.

Indirect bidders, a group that includes foreign central banks, bought 48.3 percent of the amount sold, compared with 48.8 percent in the prior auction. Primary dealers bought 41.7 percent, compared with 30.7 percent in the previous sale. Direct bidders purchased 10 percent.

The Treasury sells all its bills, notes and bonds on a single-price basis. In the single-price auction system, notes are awarded at the highest yield needed to sell the securities.

At today’s auction, 61.2 percent of filled bids came in at the high yield of 2.235 percent. The low yield submitted was 2.117 percent, the median yield was 2.197 percent, and the coupon rate was 2.125 percent. The price was 99.290865.

Tenders totaled $71,859,187,500 and the Treasury accepted $29,000,003,500 of the bids. Competitive bids awarded totaled $28,981,216,000. Non-competitive bids awarded -- including those sold directly to individual investors -- totaled $18,787,500.

The notes will be issued Sept. 30, settle Sept. 30, and mature Sept. 30, 2021. The CUSIP number on the notes will be 912828F21.

The minimum amount for Strips, an abbreviation for Separate Trading of Registered Interest and Principal of Securities, was $100. In Strips, coupons are separated from a note or bond and become a traded security. The remaining face value bond becomes another security that is known as a zero-coupon note or bond.

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