30-year Inflation-Protected Bonds Attract Great Interest

The Treasury’s sale of 30-year inflation-protected bonds received the highest demand on record from a group of investors that includes foreign central banks, a day after a report showed an unexpected rise in consumer prices.

Indirect bidders bought 64.5 percent of the $7 billion in Treasury Inflation Protected Securities yesterday, compared with the average of 46.7 percent at the past 10 auctions. The Treasury began releasing the bidder participation data when it resumed selling 30-year TIPS in 2010, after a nine-year hiatus. The debt was first offered in 1998.

The securities yielded 0.985 percent, versus the average 0.975 percent average forecast of seven of the Federal Reserve’s 22 primary dealers in a Bloomberg News survey. The difference between yields on 30-year TIPS and comparable maturity Treasuries known as the break-even rate narrowed to 1.99 percentage points this month, the least since October 2011, from 2.46 percentage points in January, indicating declining expectations for consumer prices over the life of the bonds.

Bloomberg

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