The U.S. Treasury Department recently conducted an auction for $20 billion of 10-year Treasury Inflation-Protected Securities (TIPS). The auction resulted in a yield of 2.243%, marking the highest level since January 2009. This yield was one basis point higher than the pre-auction trading levels, indicating slightly lower demand than anticipated.
In terms of allocation, primary dealers received 10.2% of the issuance, which is a decrease from the previous auction. Direct bidders saw an increase in their share, receiving 23.3% of the total. Meanwhile, indirect bidders, which include foreign investors and central banks, had their allocation reduced to 66.5%.
The bid-to-cover ratio, a measure of demand that compares the total amount of bids to the amount of securities offered, stood at 2.48 times. This is slightly above the average of 2.39 times observed in the previous three auctions.
