2012 Economic Calendar
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10-Yr TIPS Auction  
Released On 9/20/2012 1:00:00 PM For 9/20/2012 1:00:00 PM
Auction Results
Total Amount$13 B 
Coupon Rate0.125% 
Yield Awarded-0.750% 

Accounts are not rushing for inflation protection based on the results of today's 10-year TIPS auction. Coverage of 2.36 is the lowest for this issue since the auction of April 2009. The high yield of minus 0.750 percent is higher than expected which is another sign of weakness. Dealers were awarded 49 percent of the $13 billion offering which, for this issue, is a high share and one that hints at soft participation from buy-and-hold accounts.

The Treasury sells Treasury Inflation-Protected Securities, also known as TIPS, at regularly scheduled auctions. Competitive bids at these single-price auctions determine the interest rate paid on each issue, which remains fixed. Note the interest rate cannot be negative with the Treasury setting a minimum of 0.125 percent. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the TIPS, resell them to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. The Treasury announces the amount, date and time of the 10-year TIPS auction six times a year: January, March, May, July, September and November. New issues of 10-year TIPS are usually announced at the beginning of January and July. The March, May, September and November announcement calls for a reopening of the previously issued security. In each of the aforementioned months, 10-year TIPS are usually auctioned in the next to the last Thursday of the month. They are issued (settled) on the last day of the month; if it falls on a weekend or holiday, then they are issued on the next business day.  Why Investors Care

Data Source: Haver Analytics

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