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10-Yr TIPS Auction  
Released On 5/17/2018 1:00:00 PM For 5/17/2018 1:00:00 PM
Auction Results
Total Amount$11 B 
Coupon Rate0.500% 
Yield Awarded0.934% 
CUSIP Number9128283R9 
Originally Announced CUSIP9128283R9 

Results are soft for today's 10-year TIPS auction, where coverage, at 2.42, was the lowest since September and end investor demand for the inflation protected securities was relatively weak, with non-dealers taking down 71 percent of the $11 billion offering, their smallest share in the last 6 auctions. The awarded high yield, at 0.934 percent, was 17 basis points above the previous auction rate and the highest since January 2011. Compared to the 3.105 percent yield of the conventional 10-year note at the time of the auction close, it implies a breakeven annual inflation rate over the next 10 years of approximately 2.17 percent, 10 basis points higher than the breakeven rate implied by the high yield awarded in the previous 10-year TIPS auction.

The Treasury sells Treasury Inflation-Protected Securities, also known as TIPS, at regularly scheduled auctions. Competitive bids at these single-price auctions determine the interest rate paid on each issue, which remains fixed. Note the interest rate cannot be negative with the Treasury setting a minimum of 0.125 percent. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the TIPS, resell them to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. The Treasury announces the amount, date and time of the 10-year TIPS auction six times a year: January, March, May, July, September and November. New issues of 10-year TIPS are usually announced at the beginning of January and July. The March, May, September and November announcement calls for a reopening of the previously issued security. In each of the aforementioned months, 10-year TIPS are usually auctioned in the next to the last Thursday of the month. They are issued (settled) on the last day of the month; if it falls on a weekend or holiday, then they are issued on the next business day.  Why Investors Care

Data Source: Haver Analytics
The yield on the 10-year TIPS note hovers near yields of much shorter term notes, reflecting its guarantee against inflation risk. This chart shows the high yield awarded at 10-year TIPS auctions from July 2008 up to and including the latest auction results.
Data Source: Haver Analytics

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