| Security Type | New or reopening? | Announcement Date | Auction Date |
| 5-Year TIPS | New | Thursday, Oct 15, 2020 | Thursday, Oct 22, 20020 |
| 10-Year TIPS | Reopening | Thursday, Nov 12, 2020 | Thursday, Nov 19, 2020 |
| 5-Year TIPS | Reopening | Thursday, Dec 17, 2020 | Tuesday, Dec 22, 2020 |
| 10-Year TIPS | New | Thursday, Jan 14, 2021 | Thursday, Jan 21, 2020 |
The U.S. Treasury instituted a new TIPS auction schedule in 2019, eliminating one 30-year reopening and adding a new 5-year originating auction. More details.
Here is Treasury’s new schedule of auctions:
- January. New 10-year TIPS.
- February. New 30-year TIPS.
- March. Reopening of January 10-year.
- April. New 5-year TIPS.
- May. Reopening of January 10-year.
- June. Reopening of April 5-year.
- July. New 10-year TIPS.
- August. Reopening of February’s 30-year.
- September. Reopening of July 10-year.
- October. New 5-year TIPS.
- November. Reopening of July 10-year.
- December. Reopening of October 5-year.
Could you explain, or direct me to where on the site an explanation already exists for, the difference between new and reissued TIPS as listed above? Thanks.
JJ, the Treasury does a TIPS auction each month, and sometimes it is a new issue. That means the base interest rate (coupon rate) and yield to maturity will be set at auction. So for a new issue, you won’t know coupon rate for sure, and the yield you get will be close to the coupon rate. The price you pay for the TIPS will be close to par value, as long as the yield is positive.
When a TIPS is reissued, it carries the coupon rate from the original auction. A few months will have passed, so the yield could have moved strongly up or down from the coupon rate, meaning the price you pay for the TIPS could be less or more than par value.
Once a TIPS is issued, it trades on the secondary market, so it is easier to estimate its likely value at auction. With a new issue, the price can be a little harder to estimate.
Take a look at this post for a recap of all the new and reissues of 2012 and you can see the pattern: https://tipswatch.com/2012/12/30/recapping-2012-the-year-in-tips/
Dave,
From Goldman-Sachs just now:
After October 17, the Treasury can keep conducting auctions to roll over maturing securities, but it cannot increase outstanding debt. If the debt limit is not raised before the Treasury depletes its cash balance, Goldman fears it could force the Treasury to rapidly …
The upcoming 30 yr TIPS auction might have an elevated yield due to concerns …
Will bear extra watching, maybe …
Best,
Ed
Ed, not seeing any upward trend yet in yields. Seems inevitable, but busting the debt limit is very negative for the stock market and very positive for Treasurys, as odd as that sounds. So the trend right now is for lower yields.
Beware the “Ides of October”
Dave, I was thinking that if the USA looks uncertain to repay its debts, higher yields for USA to borrow will result. You seem to be reckoning oppositely … I don’t follow.
Ed
Ed, I would have thought that too, especially in 2011 when the S&P actually downgraded the US debt at the apex of a similar crisis. Instead the exact opposite happened, as I detailed in this posting: https://tipswatch.com/2013/04/25/the-tips-earthquake-when-did-it-happen-and-why/
What actually happened was a severe decline in the stock market and a flight to safety, with Treasurys and especially TIPS benefiting. Back in 2011, the fear was a government with spending out of control. That has lessened a bit now, since government spending isn’t the key issue. But it is still an issue, and inflation is still a threat.
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have you a POV on the 10 yr now open?
I’ll be posting later today on that new 10-year TIPS.
I don’t understand the significance of the TIP ETF. Is that just the current price, and why do I care if I am holding the actual bonds? I also prefer to buy when inflation sentiment is out of favor, and buy at a discount. The government pays you to buy their paper, that seems like a good thing for the investor.
Ambrose, I don’t invest in the TIP ETF or any TIPS mutual funds, but the price of that ETF is a good indication of current sentiment. It is up more than 5% since February, which indicates that both Treasurys and inflation protection are in high demand. The 10-year TIPS is now yielding 0.12%, down about 60 basis points since the January auction.
what do you think of the FRN?
I looked at it in the past and didn’t like it as an investment for a small investor. Might deserve another look if short-term rates rise … https://tipswatch.com/2013/11/06/the-new-treasury-floating-rate-notes-why-they-look-like-a-bad-deal/
the FRN auction tomorrow is a reissue, does that have any significance?
Greetings: Excellent site. Can you direct me to resources that may help identify current and historical market “real” yields (versus nominal) for 5 and ten year TIPS. My objective is to assess relative real yields over time. Thanks.
Frank, you can get this at the Treasury’s Real Yields Curve site, for both nominal and real yields: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
A news story yesterday said the president talked about negative interest rates with the head of the Fed. How do possible negative interest rates (whatever that actually means to the little guys) fit into making a decision to buy TIPS?
Negative nominal interest rates would be a disaster for future bond investors. If the 10-year nominal Treasury yield went negative, it would mean the 10-year TIPS real yield would be somewhere in the range of -1.50% to -1.75%. That would be about 100 basis points lower than the record low for a 10-year TIPS. All of this would mean soaring bond prices for bonds you already own, but future bond-buying would be extremely unattractive.