TREASURY SECURITIES & PROGRAMS

Auctions

One way the government finances activities of the Federal government is by the sale of marketable Treasury Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS) to the public. Marketable securities can be bought, sold or transferred after they are originally issued. Treasury uses an auction process to sell marketable securities and determine their rate or yield. The value of Treasury marketable securities fluctuates with changes in interest rates and market demand. You can participate in an auction and purchase Bills, Notes, Bonds, and TIPS directly from the Treasury or you can purchase them through a bank or broker. Marketable securities held in your account can be sold at current market prices through brokers and many financial institutions.

Treasury annual auction activity:

To participate directly through the U.S. Treasury:

Note: The 30-year Bonds, 20-year TIPS, and 4-week Bills are not available for purchase in Legacy Treasury Direct, but are available in TreasuryDirect.

For a description of the differences between TreasuryDirect and Legacy Treasury Direct, see My Accounts.

Overview of the Auction Process

Treasury sells marketable securities (Bills, Notes, Bonds, and TIPS) through regular public auctions, by which the rate or yield of these securities are determined.

The process begins several days before the scheduled auction when the Treasury announces the details of the upcoming issue, including the amount to be auctioned and the maturity date. When you participate in an auction, you have two bidding options – competitive and noncompetitive. Both TreasuryDirect and Legacy Treasury Direct allow noncompetitive bidding only. Noncompetitive bidding is limited to purchases of $5 million for Treasury Bills, Notes, Bonds, and TIPS. Bidding limits apply cumulatively to all methods (TreasuryDirect, Legacy Treasury Direct, banks or brokers) that are used for bidding in a single auction.

  • With a competitive bid, you specify the rate you will accept.
  • With a noncompetitive bid, you agree to the rate set at auction.

At the close of an auction, Treasury accepts all noncompetitive bids that comply with the auction rules, and then accepts competitive bids in ascending order in terms of their yields (lowest to highest) until the quantity of accepted bids reaches the offering amount. All bidders, non-competitive and competitive, will receive the same rate or yield at the highest accepted bid.

How Does It Work?

The auction process is divided into the following three steps.

Who Can Participate?

All auctions are open to the public. The following Treasury services enable various categories of investors to participate directly:

You can read the relevant auction rules and the Treasury Securities Offering Announcement Press Release to determine if you may participate.