US Treasury Auction Results

The Bid-to-Cover Ratio
The Bid-to-Cover Ratio is calculated by dividing the total dollar amount of bids received (Tendered) by the dollar amount of securities sold (Accepted).

Average Ratios: Historically, a ratio of 2.0 or higher is generally considered a sign of a successful auction with healthy demand.

Significance: A higher ratio indicates strong demand, meaning the Treasury received many more offers to buy than it had securities to sell. A lower-than-average ratio (closer to 1.0) can signal "weak" demand, suggesting the market is less interested in the debt at current rates.

Context: What is "acceptable" varies by security type. For example, shorter-term Treasury bills often see higher ratios than 30-year bonds. Analysts typically compare the result of a specific auction to the average of the previous 12 auctions for that same security to determine if the "difference" is normal.

Why Some Bids Are Not Accepted
The difference between tendered and accepted amounts occurs because the Treasury uses a Single-Price (Dutch) Auction format:

Non-competitive Bids: These are accepted in full first. Bidders agree to accept whatever yield is determined by the competitive side.

Competitive Bids: The Treasury accepts these starting from the lowest yield (best for the government) and moves upward until the entire offering is sold.

The "Stop": Bids above the highest accepted yield (the "stop") are rejected entirely.

Prorating: If there are too many bids at the exact "stop" yield, the Treasury prorates those specific bids, awarding only a percentage of what was requested to ensure the total accepted matches the announced offering amount.

Key Limitations
35% Rule: To prevent any single entity from dominating the market, no bidder can be awarded more than 35% of the total offering.

Non-competitive Limit: Individual non-competitive bids are generally limited to $10 million per auction.