The U.S. Treasury today, as expected, announced its Jan. 19 auction of a new 10-year Treasury Inflation-Protected Security.
But that pdf won’t tell you much. It is a 10-year TIPS, yes. It is CUSIP 912828SA9. The auction date is January 19, 2012. OK, we knew that.
What is the coupon rate, the actual base rate this TIPS will pay over the next 10 years? Well, that’s not mentioned. (For new issues, both the price and the coupon interest rate will be determined by the auction.) Let’s assume the coupon rate will be the lowest the Treasury offers, and that is 0.125%.
That means buyers might have to ‘pay up’ for this TIPS, because the current secondary market for a 10-year TIPS is about -0.166%.
Things can change in the next week, so it’s worth watching this site to see what the market is paying for the TIPS that matures 2021 Jul 15, which is the closest comparable you can get to a 10-year new issue.
But I will warn you that TIPS auctions, especially new issues, can be very hard to predict. I readily admit that I am no expert, and I’m often surprised at the auction result.