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-three primary dealers (as of July 2006) 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 07/25/2006 Yield Awarded 2.494 % Highlights Demand was strong for the Treasury's semi-annual offering of 20-year inflation-protected bonds, posting a very strong bid-to-cover ratio of 2.24. Bidding by indirect bidders was also very strong, at 69 percent indicating heavy demand from retail customers such as pension funds and insurance companies. The results point to rising demand for inflation-protected securities, a reflection of rising inflation pressures such as this morning's 5.1 percent consumer-expectation reading from the Conference Board. Trends Data Source: Haver Analytics Consensus Data Source: Market News International Legal Notices | © 1998-2006 Econoday, Inc. All Rights Reserved.