Checking in on today’s 10-year TIPS auction

The U.S. Treasury is reopening CUSIP 912828B25 in an auction today, creating a 9-year, 8-month Treasury Inflation-Protected Security with a coupon rate of 0.625%.

I wrote about this last week and noted that the likely yield to maturity on this TIPS is not going to be very enticing. Here’s an update on market conditions this morning for this TIPS, which trades on the secondary market:

  • Bloomberg’s Current Yields is flashing a yield of 0.34% and a price of about $102.65 per $100 of value. (This TIPS carries a coupon rate of 0.625%, so buyers will need to pay up at auction to get the higher coupon rate.)
  • The Wall Street Journal’s bond prices chart shows this TIPS closed Wednesday at 0.329% and a price of about $102.80.
  • The Treasury’s Daily Yield Curve chart estimates a full-maturity 10-year TIPS would had a yield of 0.36%.
  • The TIP ETF, which holds a broad range of maturities, is trading right now at $114.60, down slightly today (meaning yields have risen slightly).

All of that adds up to a wild guess of a yield of about 0.34% at auction today, well below what buyers got when this TIPS first auctioned on Jan. 23 with a yield of 0.661%.

Noncompetitive bidding closes at noon and competitive bidding ends at 1 p.m.

I will post the result of the auction shortly after 1 p.m.

 

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