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 announces the amount, date and time of the 10-year TIPS auction four times a year: January, April, July and October. The 10-year TIPS are usually announced at the beginning of January and July. The April and October announcement calls for a reopening of the previously issued security. In each of the aforementioned months, 10-year TIPS are auctioned in the second week of the month. These TIPS are issued on the 15th of the month; if it falls on a weekend or holiday, then they are issued (settled) on the next business day. Released on 10/11/2007 Yield Awarded 2.360 % Highlights Demand was solid for the Treasury's pint-size auction of $6 billion in 10-year inflation protected securities (TIPS). The notes are a reopening of the prior offering with a maturity of 9 years and 9 months. The award rate of 2.340 percent was a little above expectations though the bid-to-cover, boosted by the small auction size, was a solid 2.05. Indirect bidders were active, taking roughly 37 percent of the auction to indicate strong demand from non-dealers. Treasuries dipped slightly on the results. TIPS auctions are usually quiet affairs, but not if inflation begins to pick up which would increase demand for these risk-free securities. Trends The yield on the 10-year TIPS note hovers near yields of much shorter term notes, reflecting its guarantee against inflation risk. Data Source: Haver Analytics Consensus Data Source: Market News International Legal Notices | © 1998-2006 Econoday, Inc. All Rights Reserved.