Next TIPS auction: 10-year on May 19, 2011

Although we don’t yet have full details, we know the Treasury will announce on Thursday, May 12, 2011, an auction of a 10-year Treasury Inflation-Protected Security. The auction date will be May 19 and the settlement date May 31.

The last comparable TIPS auction was a 9-year, 10-month reissue on March 31 that carried a coupon rate of 1.125% and a base yield set by the auction at 0.92%. (That is the yield the buyer receives until maturity, with the principal rising with inflation over the 10 years.)

The May 19 auction also is a reissue. The base yield is likely to be set by the auction around 0.68%, based on where rates were Tuesday, May 4.

My favorite quote from a Reuters story about the March 2011 auction:

“If there’s anything that’s unpredictable, it’s a TIPS auction,” said Tom Simons, money market economist at Jefferies & Co in New York.

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