Defying The Naysayers: 5-Year TIPS Reopening Auctions With A Real Yield Of 0.12%

Summary

  • A bear market for Treasury Inflation-Protected Securities? Not based on this auction, which generated strong demand.
  • The coupon rate of 0.12% fell just below the coupon rate of 0.125%, meaning buyers had to pay a small premium for this TIPS.
  • TIPS have been out-performing the overall bond and Treasury markets over the last week. Inflation protection is still ‘in’.

TIPS have been on the move this week, with yields falling and prices rising. It’s a bit of a shock for those predicting a collapse in the Treasury market. And today’s auction was probably a bit of a disappointment for investors expecting a slightly higher yield.

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Read my full analysis on SeekingAlpha.com

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About Tipswatch

Author of Tipswatch.com 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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