- Coupon rate was set at 0.125%, the lowest the Treasury will go.
- Buyers had to pay a premium, an adjusted price of about $100.98 for $100 of par value.
- The inflation breakeven rate came in at 1.54%, historically low and attractive against a nominal Treasury.
The yield ended up being lower than I expected, and it ran counter to a slight decline in the TIP ETF Thursday morning. I was expecting somewhere around 0.14%, so today’s auction indicates there is still strong demand for Treasury Inflation-Protected Securities.
Good point on the i bond. I think I would go with the ee bond first.
I think the EE bond with the 10k limit is a much better deal than this.
Jim, I’d say the I Bond is also a much better deal than a 10-year TIPS. The fixed rate of 0.1% beats the TIPS yield, plus the I Bond has tax advantages and a flexible maturity. The EE Bond is a steal if you are absolutely sure you can hold it 20 years, earning 3.5% versus 1.9% for a 20-year nominal Treasury.
Ayce, the premium kicks in because the coupon rate was set at 0.125%, but the auctioned yield was 0.045%. Buyers had to kick in extra money to receive the higher coupon rate for 10 years.
why the .98 cent premium ?