Stigum's Money Market by Marcia Stigum & Anthony Crescenzi

Author:Marcia Stigum & Anthony Crescenzi
Language: eng
Format: epub
Publisher: McGraw-Hill Companies,Inc.
Published: 2007-08-21T04:00:00+00:00

BILLS, NOTES, AND BONDS

Negotiable Treasuries come in three principal varieties: bills, notes, and bonds.

Bills

Treasury auctions began in 1929 with the sale of Treasury bills. From 1977 through 2005, bills as a percentage of Treasury debt outstanding averaged approximately 26%; currently bills are about 23% of total Treasury debt outstanding.

The Treasury currently issues bills in 1-month, 3-month, and 6-month maturities. In addition, the Treasury issues cash management bills from time to time depending upon borrowing needs. Except for holidays or special circumstances, the 3-month and 6-month bills are offered every Monday for settlement on the Thursday following the auction, and 4-week bills are sold on Tuesdays, for settlement on the Thursday following the auction. As with all other Treasuries, bills are issued in minimum denominations of $1,000, and multiple purchases are also in denominations of $1,000. A round lot in the interdealer market is $5 million, and retail customers who buy bills from a dealer will get a quote somewhat off the market unless she bids for size. The Treasury was selling close to $50 billion of bills each week in late 2006.

Bills used to be issued by the Treasury in the form of bearer certificates. The Treasury and the Fed then made it possible to hold bills in book-entry form (described below), and since 1986 the Treasury has offered bills in book-entry form only, meaning they exist only as electronic records in computers.

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