Econoday Economic Report: 10-Yr TIPS Auction November 17, 2011

2011 Economic Calendar

Resource Center » Event Release Dates | Event Definitions | Today's Calendar

10-Yr TIPS Auction

Released On 11/17/2011 1:00:00 PM For 11/17/2011 1:00:00 PM

Auction Results
Bid/Cover	2.64
Coupon Rate	0.625%
Total Amount	$11 B
Yield Awarded	0.099%

Highlights
Demand was solid for today's auction of 10-year TIPS, a 9-year 8-month reopening of the July 0.625 percent coupon. Coverage of 2.64 is right in trend while the dealer share of 42 percent is moderate which points to investor interest.

Definition
The Treasury sells inflation-indexed 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. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills 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 recent 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: http://www.newyorkfed.org/markets/pridealers_current.html 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. The 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 auctioned in the second week of the month. These TIPS are issued on the last day of the month; if it falls on a weekend or holiday, then they are issued (settled) on the next business day. Why Investors Care

Data Source: Haver Analytics