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Bidding during a treasury auction, The yield will be higher must you consider if you enter a higher price.
Why are Treasury auctions important?
Treasury auctions encourage broad, competitive bidding and active secondary market trade in an effort to reduce the cost of financing the national debt. How these goals have been attained can be seen by reviewing the entire auction process, from the declaration of a new issue to the distribution of securities.
On the news release announcing the results of the auction, customers that submit competitive bids through a direct submitter—such as the Federal Reserve Bank of New York—are referred to as "Indirect Bidders."
Specifically, Treasury notes (T-bills), with maturities ranging from one month to one year, are the subject of a weekly public auction by the U.S. Treasury. Your institution may put in a bid for the security after the auction is announced. With the exception of Cash Management Bills, you can place your bids directly through Treasury Direct, TAAPS, or by arranging to buy securities through a broker, dealer, or financial institution.
Hence, Competitive bidding is limited to 35% of the offering amount for each bidder, and a bidder specifies the rate, yield, or discount margin that is acceptable.
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