TIPS yields fall sharply as Federal Reserve delays tapering of economic stimulus

The Federal Reserve blinked today and delayed any move to cut back on its bond-buying stimulus. The immediate reaction in the TIPS market was a plunge in yield. This development puts in turmoil the likely yield for Thursday’s auction of a reissue of a 10-year Treasury Inflation-Protected Security, CUSIP 912828VM9.

The yield on a nominal 10-year Treasury immediately dropped about 10 basis points. At 2:30 p.m., Bloomberg’s real-time data for a 10-year TIPS show a yield of 0.54%, down 16 basis points from yesterday’s close of 0.70%.

The dramatic move is shown in this inter-day chart for the TIP ETF:

Screen Shot 2013-09-18 at 2.15.06 PM

More details to come as we get more information.

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