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Resource Center » U.S. & International Recaps | Release Dates | Why Investors Care | Today's Calendar
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20-Year TIPS Auction
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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. Twenty primary dealers (as of November 30, 2007) are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold, resell, or trade the securities with other firms. The Treasury usually announces the amount, date and time of the 20-year TIPS auction in the third week of January. The reopening is usually announced in the third week of July. In both cases, 20-year TIPS are usually auctioned in the last week of the month. These TIPS are issued (settled) on the last business day of the month. These TIPS, however, have a mid-month maturity date. Consequently, investors who purchase these securities at auction are required to pay the interest accrued between the 15th of the month and the issue date. The 20-year issue in July 2004 had an initial maturity date of 20 1/2 years and was reopened in January and July 2005. Why Investors Care
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Highlights
Demand was solid for the Treasury's 20-year TIPs auction, awarded at a high yield of 1.807 percent that was just under the when-issued yield at the bidding deadline. The bid-to-cover, at a soft 1.79, was in line with the issue's long term average. Non-dealers were active bidders, taking down 53 percent of the $8 billion offering. Ongoing upheaval in the financial markets, including the Federal Reserve's focus on stimulating growth, may be giving a slight boost to demand for inflation protected securities.
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Trends
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2008
Release Schedule
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| Released On: |
1/24 |
7/22 |
| Released For: |
Dec
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Jul
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