The Treasury Department completed a record sale of 3-year notes early Wednesday afternoon, as the governments continues to sell debt to fund its economic stimulus measures.
In recent months, the government has amped up its debt offerings in order to build funding for the unprecedented spending outlined in the Obama administration's stimulus package.
The day's auction was for a record $35.0 billion worth of 3-year notes, which drew a high yield of 1.385 percent. Meanwhile, the sale attracted moderately strong demand, with the bid-to cover ratio coming in at a level of 2.42. The security is scheduled to mature April 15th, 2012.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The previous auction took place early last month, when the government sold $34.0 billion worth of the security. The sale drew a high yield of 1.489 percent and posted moderate demand, with the bid-to-cover ratio coming in at 2.26.
While the Treasury Department continues to auction record amounts of treasury bills, the Federal Reserve has begun to buy back some of the securities.
In addition to the treasury repurchase, the Fed will also buy an additional $750 billion in mortgage-backed securities and $100 billion in agency debt. The move is part of a quantitative easing plan aimed to thaw credit markets through capital injection.
Looking ahead to Thursday, investors will pay attention to an auction of ten-year notes, as the ten-year note is known as a benchmark security in the bond market.
In addition, investors will compare the results of the auction to the outcome of the ten-year TIPS sale held Tuesday. The spread between the securities is likely to give an indication of near-term inflation.
At 11:30 a.m. Thursday, the government will sell $18.0 billion worth of ten-year notes with a maturity date set for February 15th, 2019.
The previous auction took place early last month, when the Treasury sold $18.0 billion worth of the ten-year security. The auction posted a high yield of 3.681 percent while drawing modest demand, with the bid-to-cover ratio coming in at a level of 2.14.
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