The U.S. Treasury just announced the result of today’s $11 billion auction, a reissue of CUSIP 912828QV5. It auctioned with a base-rate yield to maturity of 0.078%, which is a record low for any 9- or 10-year TIPS auction. The previous record low was 0.409%, set in July 2010 just before the Fed launched QE2.
There had been some speculation today’s yield could go negative. The rate of 0.078% was up slightly from yesterday’s market rate (0.04%) for this issue, which first auctioned in July 2011.
The very low yield is an indication of very strong pessimism about the U.S. economy. From MarketWatch.com this morning:
With a yield of zero, “you only get inflation protection that’s a very dismal view of the econ over a 10-year horizon,” said Anthony Valeri, fixed-income investment strategist at LPL Financial.