The Treasury Department yesterday auctioned $44 billion of two-year notes with a 7/8% coupon at a 0.880% yield, a price of 99.990112.

The bid-to-cover ratio was 3.13. Tenders at the high yield were allotted 88.79%. The median yield was 0.838%. The low yield was 0.738%.

Tenders totaled $137,544,599,800 and the Treasury accepted $44,000,054,800, including $455,599,800 of noncompetitive.

Federal Reserve banks also bought $716,982,800 for their own account in exchange for maturing securities.

The two-year notes are dated Jan. 31 and are due Jan. 30, 2012.

The Treasury also auctioned $10 billion of four-week bills at a zero high yield, a price of par.

The coupon equivalent was zero. The bid-to-cover ratio was 5.55.

Tenders at the high rate were allotted 49.21%. The median yield was zero. The low yield was zero.

The bills have an issue date of Jan. 28 and are due Feb. 25.

Tenders totaled $55,541,095,500 and the Treasury accepted $10,000,425,300, including $211,929,500 of noncompetitive.

Fed banks bought $6,285,071,700 for their own account in exchange for maturing securities.

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