What is a Treasury auction?
Each Treasury bill, note, bond, or TIPS is sold at a Treasury auction. In these auctions, all successful bidders are awarded securities at the same price, which is the price equal to the highest rate or yield of the competitive bids we accept. You can find a complete explanation of the auction process in our Uniform Offering Circular, which is in the Code of Federal Regulations (CFR) at 31 CFR Part 356.
A Treasury auction is a public auction held by the United States Department of the Treasury. These auctions help lower the cost of financing the national debt by offering competitive bidding in a “risk free” environment. The US Department of the Treasury raises funds through the Federal Reserve Bank of New York (FRBNY) through Dutch auction — an auction where the asking price starts off high and is slowly lowered until there is a buyer. The FRBNY and brokers carry out each Treasury auction using the Trading Room Automated Processing System (TRAPS), where bids are settled in minutes. Four types of securities are sold in a Treasury auction: bills, notes, bonds, and Treasury Inflation-Protected Securities (TIPS). Each security is of varying maturity. Annually, there are 200 Treasury auctions that raise about $4.2 trillion in securities. Each Treasury auction follows a similar three-part process. The auction is first announced through major newspapers and press releases. Bids are then take
Each Treasury bill, note, bond or TIPS (except savings bonds, of course) is sold at a public auction. In Treasury’s auctions, all successful bidders (see below) are awarded securities at the same price, which is the price equal to the highest rate or yield of the competitive bids Treasury accepts.
