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US 10-year TIPS supply fetches solid demand

US 10-year TIPS supply fetches solid demand

NEW YORK: The US Treasury Department on Thursday sold $13 billion of 10-year Treasury Inflation Protected Securities to solid investor demand at a yield of 0.045 percent, the lowest yield at an auction since May 2013, Treasury data showed.

The ratio of bids to the amount of 10-year TIPS offered was 2.39, up from 2.27 at the prior auction in May and the highest since March 2015.

Indirect bidders which include fund managers and foreign central banks purchased 68.38 percent of the latest 10-year TIPS issue, which was their biggest share since September 2015.

Small dealers and other direct bidders bought 7.71 percent of the 10-year TIPS supply, which was their largest since January.

Primary dealers, or the top 23 Wall Street firms that do business directly with the Federal Reserve, purchased 23.91 percent, which analysts said was their second smallest share on record.

On a breakeven basis, which gauges investors’ view on longer-term US inflation, the yield difference between new 10-year TIPS and regular 10-year Treasuries was 1.53 percent versus 1.52 percent shortly before the auction, Tradeweb data showed.

Strong bids at Thursday’s auction trimmed the 10-year TIPS yield’s rise on the open market.

It was last 0.098 percent, compared with 0.109 percent prior to the auction, according to Tradeweb.

Copyright Reuters, 2016

Courtesy : BRecorder



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