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The latest 30-year TIPS supply fetched a yield
of 0.842 percent, down from 0.985 percent set at a prior auction
held in October. It was the lowest yield at a 30-year TIPS
auction since 0.0638 percent in February 2013.
The unexpected strong demand for the longest TIPS maturity
bolstered the sector, pushing long-dated prices and inflation
breakeven rates to session highs.
"This is the most aggressively bid new issue 30-year TIPS
auction since February 2011," Thomas Simons, money market
strategist at Jefferies & Co. wrote in a note about the auction.
Fund managers, foreign central banks and other indirect bidders
bought 69.04 percent of the latest 30-year TIPS supply. This was
their largest share at a 30-year TIPS auction since data were
available going back to February 2010, Treasury data showed.
Small bond dealers, large money firms and other direct bidders
purchased 3.96 percent of the latest TIPS issue, their smallest
share since June 2013.
Primary dealers or the 22 top Wall Street firms that do business
directly with the Federal Reserve bought 27.0 percent of the
TIPS supply. This was their smallest share going back to
February 2010.
On the open market, the most actively traded 30-year TIPS issue
due Feb. 2044 was little changed on the day near its session
high of 114-13/32 with a yield of 0.815 percent.
The 30-year inflation breakeven rate, or the yield difference
between 30-year TIPS and regular 30-year Treasury bond, was last
at 1.905 percent, just short of its session high which was also
its highest level since early January, according to Tradeweb.
(Reporting by Richard Leong; Editing by James Dalgleish and
Chizu Nomiyama)
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