New York 50A and 50B Case Resolution

Another New York 50A and 50B Discount Rate Update

Stability has not yet returned to 10 Year Treasury rates and yields, and it does not appear that it will return at any time in the near future. The results of the most recent auctions are

• •The May 15, 2009 10-year issue had a stated rate of 3.125%, and a yield of 3.19%. The government received $99.45 for every $100 bond value.
• •The June 15, 2009 9Year-11month issue had a stated rate of 3.125%, and a yield of 3.99%. The government received $92.97 for every $100 bond value.

• The July 15, 2009 9Year-10month issue has a stated rate of 3.125%, and a yield of 3.365%, or the government will receive $98.00 for every $100 bond value.
• The August 17, 2009 10Year issue has a stated rate of 3.625%, and a yield of 3.734%, or the government received $99.10 for every $100 bond value.

In the period, the auction yields first rose 80 basis points, then fell 62 basis points and then rose 37 basis points. The daily yields followed a similar erratic path and are now down 25 to 30 basis points since the last auction.

An interesting point about this last auction is that the daily yield on August 17^th was 3.45%. If an auction participant were to sell on that day, it might achieve an instantaneous return of approximately 4% with little or no investment.

Over the last two years, we have published articles discussing the impact of indexing discount rates to 10 Year Treasuries and the use of daily yields. Those articles focused on the impact on the Total Net Discounted Award, and those articles seem to have found a substantial audience as indicated by the several hundred downloads.

It seemed that additional insight might be provided through graphic displays of the moves in rates and yields, and the impact of rate changes on individual elements of future loss. That update is located at

The Indexing of Discount Rates to 10 Year Treasury Rates

The array of articles is located at

New York 50A/50B Forum

The individual sections can be accessed at

New York 50A New York 50B

The Burbank Group

Tel. #: 908-955-4661