Treasury Auctions and the Secondary Treasury Market. Treasury Auctions: A Brief History. Treasury issuance of war bonds began as an effort to cover anticipated WWI debt 1917 No outside countries available to borrow from so the debt had to be financed internally
What’s the Prize?
Most liquid (readily tradable)
Highest volume of debt in the world
Continually supported by the issuance of new securities
Allows for market demand to set the yield.
Auctions reveal market interest indicated by the “bid-to-cover” ratio.
Treasury department controls timing and quantity of new issues