Note Auction

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DEFINITION of 'Note Auction'

A formal bidding process that is scheduled on a regular basis by the U.S. Treasury. Currently there are 17 authorized securities dealers (primary dealers) that are obligated to bid on each issue. All Treasury notes are originally issued in this manner.

BREAKING DOWN 'Note Auction'

The amount of money bid by the highest bidder at these auctions will determine the interest rate paid on each issue. The primary dealers have the option of holding, selling or trading their issues after purchase. The demand for Treasury notes by these dealers will vary according to economic and market conditions.

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RELATED FAQS
  1. What does it mean when my broker says that shares are for auction?

    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Full Answer >>
  2. What is the relationship between the current yield and risk?

    The general relationship between current yield and risk is that they increase in correlation to one another. A higher current ... Read Full Answer >>
  3. Who or what is backing municipal bonds?

    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>
  4. How stable are municipal bonds?

    Stability is relative in the municipal bond market. Municipal bonds tend to be safer than many other types of investments, ... Read Full Answer >>
  5. What does it signify if the term structure of an interest rate's curve is positive?

    When the term structure of interest rates is positive, it is a signal to economists the short-term yields on similar bonds ... Read Full Answer >>
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    Funds generated from the sale of municipal bonds may go to provide for unspecified, general government financial needs, or ... Read Full Answer >>

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