How US Treasury auctions work, and how to read an auction result

From announcement to issue

An auction has four stages in Treasury’s own description: announcement, auction, bidding and issue. The offering announcement comes a few days before the auction and fixes the terms: the security, the offering amount, the auction date, the issue and maturity dates, the bidding limits and the closing times. For the 2-year note it was published on 17 September 2026, five days before the 22 September auction, with an offering amount of $69bn and issue on 30 September. Noncompetitive bids closed at 12:00 noon ET and competitive bids at 1:00 p.m. ET.

Treasury publishes a tentative six-month auction schedule at its quarterly refunding press conference, usually on the first Wednesday of February, May, August and November. Its FAQ says the dates can change but seldom do.

Competitive and noncompetitive bids

There are two ways to bid, and a bidder uses one or the other in a given auction. A noncompetitive bid names only an amount; it is filled in full at whatever yield the auction sets, up to $10m per bidder per auction. This is how bids placed through a TreasuryDirect account work. A competitive bid names a yield, entered to three decimals for notes, and may be filled in full, in part or not at all. One bidder can be awarded at most 35% of the offering. For the 2-year note that cap was $24.15bn, which is 0.35 × $69bn (our arithmetic).

The Uniform Offering Circular, the regulation at 31 CFR Part 356 that governs every auction, sets the order of acceptance. Treasury first accepts all noncompetitive bids. It then accepts competitive bids from the lowest yield upwards until the offering is filled. The yield of the last bid needed is the high yield. Bids at lower yields are filled in full; bids exactly at the high yield usually exceed what is left, so each gets the same percentage, the “allotted at high” line in the release. Bids above the high yield get nothing.

One price for everyone, and how the coupon rate is set

Treasury notes are sold in single-price auctions. Every successful bidder, competitive or noncompetitive, pays the price that corresponds to the high yield, even a bidder who asked for a lower yield. So the high yield is the auction’s yield.

For a new note the coupon rate, which Treasury’s results releases label the interest rate, is set after bidding closes. Section 356.20 says the interest rate is the one that produces a price closest to, but not above, par at the high yield. Note and bond interest rates come in steps of 1/8 percentage point (Appendix B’s interest tables run in eighths), so in practice the rate is the high yield rounded down to the nearest 1/8. The 2-year note shows it. The high yield was 4.787%. The eighths either side are 4.750% and 4.875%. At 4.875% the price would be 100.166, above par (our calculation with the Appendix B price formula), so the rate became 4.75% and the price 99.930225, just below par. Rounding the rate down is why a new note is normally sold at or slightly below par.

A reopening is different. It sells more of an existing note, so the interest rate is already fixed and the price moves instead. The 10-year note first auctioned on 12 August 2026 cleared at 4.683% and was given a 4.625% interest rate. When Treasury sold more on 7 October 2026, the high yield was 5.300%. With the interest rate below the yield, the price came out at 94.864261 per 100. Buyers also paid accrued interest from the 15 August dated date to the 15 October issue date: $1,000 × 4.625% ÷ 2 × 61 ÷ 184 = $7.66644 per $1,000 (our arithmetic: 61 days elapsed of a 184-day half-year), the figure in the release. Treasury lists the reopened security as a “9-Year 10-Month Note”, its remaining term.

Reading a results release line by line

The results page has two blocks. The top block gives the pricing: interest rate, high yield, allotted at high, price, and the median and low yields. Footnotes define the last two: half of accepted competitive tenders were at or below the median yield, and 5% at or below the low yield. The lower block gives amounts tendered and accepted.

Bid-to-cover is the public amount tendered divided by the public amount accepted. Treasury prints the sum. For the 2-year note: $181,263,862,700 ÷ $69,000,071,900 = 2.63. For the 10-year reopening: $108,068,999,700 ÷ $39,000,031,700 = 2.77. The tendered total counts competitive and noncompetitive bids and FIMA bids, from foreign and international monetary authorities bidding through the New York Fed. It leaves out SOMA, the Federal Reserve’s own portfolio. SOMA rolls maturing holdings into new issues on top of the offering amount, so the 2-year release shows $10.39bn of SOMA awards and a total award of $79.39bn, not $69bn.

The last block splits competitive awards by bidder type. Treasury’s FAQ defines them:

• Primary dealer: one of the New York Fed’s designated primary dealers, bidding for its own account.
• Direct bidder: any other submitter bidding for its own account, straight into Treasury’s auction system.
• Indirect bidder: a customer bidding through a primary dealer or direct submitter, including foreign monetary authorities bidding via the New York Fed.
• None of the three categories says where the bidder is based. Foreign and domestic bidders can appear in any of them.

Two auctions side by side

Award shares are each category’s accepted amount divided by total competitive accepted. In the 10-year reopening, indirect bidders were accepted for $31,063,238,000 of $38,665,438,000: 31,063.2 ÷ 38,665.4 = 80.34%. Direct bidders came to 6,618.2 ÷ 38,665.4 = 17.12%, and primary dealers 984.0 ÷ 38,665.4 = 2.54% (our arithmetic). Primary dealers had tendered $52.88bn, 49.1% of all competitive tenders, but less than 2% of that amount was filled (984.0 ÷ 52,876.0 = 1.86%). In the 2-year note primary dealers took 13.19%, direct bidders 29.02% and indirect bidders 57.79%.

The release says how much of each bid was filled, not why, and different auctions draw different buyers. These shares describe who bought on those two days; they are not a ranking of the auctions.

Auction yield and market yield are different measures

The yield most charts show is not the auction yield. FRED’s DGS10 and DGS2 series are constant-maturity yields drawn from Treasury’s daily par yield curve. Treasury fits that curve from indicative bid-side quotes, not trades, for the most recently auctioned securities, taken by the New York Fed at or near 3:30 p.m. each trading day. The auction high yield is the cutoff in one sale of one security at 1:00 p.m.

On 7 October 2026 the 10-year auction cleared at 5.300% and FRED’s 10-year constant-maturity yield for that day was 5.28%. On 22 September 2026 the 2-year auction cleared at 4.787% and the FRED 2-year yield was 4.71%. The gaps, 2bp and about 8bp, mix a different time of day, a different security and a fitted curve, so they say little about how the auction went. Market commentary often compares the high yield with the when-issued yield just before the 1:00 p.m. close, and calls the difference the tail. We have no primary source for when-issued yields, so we do not calculate one.

What comes next, and how to check the numbers

Treasury’s upcoming-auctions data, fetched on 21 October 2026, lists a $13bn reopening of the 20-year bond on 21 October and a $26bn 5-year TIPS auction on 22 October. It also lists the next 2-, 5- and 7-year notes for 26, 27 and 29 October and a 2-year floating-rate note for 28 October, all to be announced on 22 October; their offering amounts are blank until then.

To redo any figure here, open Auction Results on TreasuryDirect, or the auction query at treasurydirect.gov/TA_WS/securities/auctioned, which returns every field in the release as JSON. The bid-to-cover sum is printed in the release’s own footnote. FRED’s DGS10 and DGS2 give the daily constant-maturity yields, and our rates page at /rates shows the curve with dates. For how the 10-year yield splits into real yield and inflation compensation, see /articles/real-yields-breakevens-10-year-treasury.