A Treasury auction is scheduled for Tuesday, with an offering amount of $70 billion.
Why It Matters
The United States uses debt to pay for services via a range of securities. This includes Treasury bonds, notes and bills.
When the securities are sold by the government, it’s called a Treasury auction.
What Is a Treasury Auction?
Treasury auctions are held nearly 300 times a year, with more than $8.3 trillion worth of securities being sold each year, according to U.S. government data.
These auctions allow the government to sell Treasury bonds, notes and bills and dramatically impact interest rates. The amount auctioned off depends on how much the Treasury needs to keep the government running.
The people who buy the debt via these securities are providing the U.S. government with the money it needs to continue operating, and they end up making interest through the yields the purchases produce.
Treasury Auction Schedule
The Treasury Auction schedule is posted on the Treasury’s website. Typically, these auctions are announced a few days before, with the settlement date arriving several days after the auction.
There are more auctions set for this week, one on Wednesday and two on Thursday.
Treasury Auction Results
For the last Treasury Auction, the government saw an investment rate of 4.31 percent, with a $99.5 price per $100.
You can see the full result from Treasury Auctions on the TreasuryDirect.gov website.
Who Can Bid on a Treasury Auction?
Nearly anyone can participate in a Treasury Auction. That includes individual investors, corporations, foreign governments and pension funds.
Bidders are required to submit how much they’re willing to pay and at what interest rate.
While banks and investment firms typically submit competitive bids with exact terms, smaller investors generally offer non-competitive bids at whatever rate the government chooses.
MANDEL NGAN/AFP via Getty Images
What People Are Saying
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “Imagine the government needs cash, and I don’t mean spare change for coffee. These auctions are how Uncle Sam raises money to keep the country running. It’s basically a massive, structured fundraising event where the Treasury sells government debt securities.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Auctions like this are when the United States Department of the Treasury sells securities to investors in order to finance the national debt. Over the past few decades, it has become the primary way that our country pays its expenses and has been able to take on the increasing deficit we currently have.”
“This latest auction reflects the Treasury’s current expectations for America’s economic outlook and debt needs in the coming months. And while any American can technically participate in the auction, it’s best to have a game plan before purchasing. Selecting an intermediary or setting up a TreasuryDirect account are the easiest and most efficient ways of participating.”
What Happens Next?
Mortgage rates and saving account interest rates take direct cues from the Treasury yields, and the results can reflect more generally how the world views U.S. financial stability.
“These auctions tell a story of economic health, global confidence, and fiscal strategy,” Ryan said.
