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10-Yr TIPS Auction
Released On 5/17/2012 1:00:00 PM For 5/17/2012 1:00:00 PM
Auction Results
Bid/Cover3.01 
Coupon Rate0.125% 
Total Amount$13 B 
Yield Awarded-0.391% 

Highlights
At 3.01, coverage for the 10-year TIPS is the strongest of the last 12 auctions. Average coverage for this issue, which dates back to 1997, is 2.38. For the third straight auction, the high yield is negative, at minus 0.391 percent. Non dealers were particularly active in this auction which hints at strong interest from buy-and-hold investors.

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
 
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Data Source: Haver Analytics
 
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