10-Year TIPS Reopening Generates A Real Yield Of 0.567%

Summary

  • The real yield of 0.567% was in line with where this TIPS was trading Thursday morning. No surprise, and the auction appears to have been met with strong demand.
  • Buyers had to pay a lofty premium, however, because the real yield fell well below the coupon rate of 0.875% generated at the originating auction in January.
  • The inflation breakeven rate came in at 1.73%, the lowest at auction for this term since September 2016.

Because the auctioned yield was well below the coupon rate, investors had to pay a premium price, about $103.54 for about $100.66 of value, after accrued inflation is added in.

Read my full analysis on SeekingAlpha.com

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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