Fifth Consecutive Negative Yield TIPS Auction

If one is looking for a deflationary signal about the US economy, a good place to start might be with Treasury Inflation-Protected Securities, known as TIPS. The US Treasury Department sold $13 billion in 10-year TIPS today at a negative yield of -0.75%, the fifth auction in a row to post a negative yield. The negative yield is down from the July auction’s negative yield of 0.637%

Offers to buy totaled 2.36 times the amount of debt sold, below the average of 2.78 times at the previous six auctions. Foreign central banks and other indirect bidders bought 43.8% of the TIPS on offer, and direct bidders such as domestic money managers took another 7.7%. The amount taken by indirect bidders is 4.8% above the recent average of 39%, while direct bidders have averaged 15.6% of purchases in the most recent six auctions.

Yields on 10-year Treasury notes fell slightly following the TIPS auction.

Paul Ausick