U.S. Sale of 30-Year TIPS May Yield 1.149%, Dealer Survey Shows

The U.S. auction of $7 billion of 30-year Treasury Inflation Protected Securities will draw a yield of 1.149 percent, according to the average forecast of six of the Federal Reserve’s 22 primary dealers in a Bloomberg News survey.

The sale is the 16th long-bond TIPS offering since auctions of the security resumed in February 2010 after the Treasury stopped selling them in 2001. The bonds mature in February 2045. Bids are due by 1 p.m. New York time.

The securities yielded 0.842 percent at the last sale, a $9 billion offering on Feb. 19. They drew a record-low auction yield of 0.479 percent on Oct. 18, 2012.

The last sale’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.43, versus an average of 2.55 at the past 10 auctions.

Indirect bidders, a category of investors that includes foreign central banks, bought a record 69 percent of the bonds at the February sale, compared with an average of 53.4 percent at the past 10 offerings.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 4 percent of the securities at the last auction, compared with a 11 percent average at the past 10.

Inflation-indexed notes pay interest at lower rates than nominal Treasuries on a principal amount that’s linked to the Labor Department’s consumer price index.

TIPS due in 15 years and longer have lost 4.6 percent this year after returning 19.3 percent in 2014, their best year since 2011, according to Bank of America Merrill Lynch’s 15-Plus Year U.S. Inflation-Linked Treasury Index.

Nominal Treasuries maturing in 15 years or longer have lost 4.7 percent, compared with a 26.3 percent increase in 2014, according to the Merrill Lynch 15-Plus Year U.S. Treasury Index.

The Fed’s primary dealers trade Treasuries with the central bank and are obligated to participate in U.S. debt sales.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE