Reissue of 10-year TIPS auctions at 0.078%

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 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.


About Tipswatch

Author of blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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