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-two primary dealers (as of August 2004) 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. Released on 01/24/2006 Yield Awarded 2.039 % Highlights The U.S. Treasury auctioned $10 billion of 20-year TIPS today with a coupon rate of 2 percent and a high yield of 2.039 percent. Both the coupon rate and the yield were lower than those seen at the July 2005 auction as long-bond yields have generally come down since then. The demand for this issue was not as strong as July's auction, but the bid-to-cover ratio of 1.48 was in line with the average for this maturity. Last summer, quite a few analysts were touting inflation-adjusted bonds and they appeared to be quite in fashion. We have not seen analysts clamoring for TIPS with quite the same fervor lately. Trends Data Source: Haver Analytics Consensus Data Source: Market News International Legal Notices | © 1998-2006 Econoday, Inc. All Rights Reserved.