Treasuries Erase Ease Gains as Demand Drops at TIPS Sale

Treasury notes erased gains as an auction of inflation-indexed notes drew the weakest demand in more than three years amid speculation that consumer prices may not rise as fast as their yields indicated following the latest monetary stimulus measures announced by the Federal Reserve.

The $13 billion 10-year issue’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.36, the lowest level since April 2009. Primary dealers, who are required to bid in U.S. auctions, ended up with 48.5 percent of the Treasury Inflation-Protected Securities, the most since the January sale and more than the average of the 10 previous auctions.