2018 Economic Calendar
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30-Yr TIPS Auction  
Released On 2/15/2018 1:00:00 PM For 2/15/2018 1:00:00 PM
Auction Results
Total Amount$7 B 
Bid/Cover2.31 
30-Year TIPS Auction Rate1.003% 
CUSIP Number912810SB5 
Originally Announced CUSIP912810SB5 

Highlights
Results are mixed for today's 30-year TIPS auction, where coverage, at 2.31, was the lowest in a year and below the long-term average, but end investor demand was typically strong for the inflation protected securities with the longest maturity offered by the Treasury, with non-dealers taking down more than 77 percent of the $7 billion offering. At 1.003 percent, the awarded high yield was 9.5 basis points above the last auction rate for the inflation-protected bond and the highest since February 2016.

Definition
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 usually announces the amount, date and time of the 30-year TIPS auction in mid-February for the original issues and mid-month June and October for the reopenings. In original issuance as well as reopenings, 30-year TIPS are usually auctioned on the next to the last Thursday of the relevant month. These TIPS are issued (settled) on the last business day of the month but they have a mid-month maturity date. Consequently, investors who purchase these securities at auction are required to pay the interest accrued between the 15th of the month and the issue date.  Why Investors Care
 
[Chart]

Data Source: Haver Analytics
 
[Chart]
The yield on the 30-year TIPS bond hovers near yields of much shorter term notes, reflecting its guarantee against inflation risk. This chart shows the high yield awarded at 30-year TIPS auctions from February 2010 up to and including the latest auction results.
Data Source: Haver Analytics
 

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