Analyzing Treasury Auction Dynamics

This chapter explores the dynamics of Treasury auctions, highlighting how demand affects yields and the importance of bid-to-cover ratios and tails in assessing auction quality. It discusses the market's scrutiny of auction outcomes, emphasizing the role of demand-supply balance in setting auction prices. Additionally, the chapter examines the growing size of Treasury auctions to accommodate fiscal deficits, with a focus on bid-to-cover ratios, tails, and the involvement of primary dealers like Goldman Sachs.