30-Year TIPS Reopening Gets First Negative Real Yield In History

Summary

  • The real yield of -0.272% fell about 53 basis points below the yield of the originating auction on February 20.
  • Investors had to pay a huge premium to collect the coupon rate of 0.25%, about $116.32 for about $100.26 of inflation-adjusted principal.
  • The market reaction to the auction looked negative, with the yield climbing about 6 basis points higher than where this TIPS was trading minutes before the auction close.

The U.S. Treasury’s auction Thursday of $7 billion in a reopened 30-year Treasury inflation Protected Security – CUSIP 912810SM1 – generated a real yield to maturity of -0.272%, the first time in history a TIPS auction of this term resulted in a yield negative to inflation.

Read my full analysis on SeekingAlpha.com

Recent 30-year TIPS auctions

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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