10-year TIPS auction yield is 2.55%

Friday, July 14th, 2006
Categorized as: TIPS

The high yield was 2.550% in the Treasury’s 10-year TIPS auction held yesterday. The actual interest rate that will be paid by the investment is 2.5%. The price for a $1,000 bond was $995.93(010).

The bonds will have interest payment days of January 15 and July 15, so investors also have to prepay interest of $0.13(591) per bond to cover the period from July 15 to the bond’s issue date, July 17. This prepayment will be reimbursed to investors in the January interest payment.

Thus the total cost to TreasuryDirect investors will be $996.07 per bond.

Both the price and yield have been adjusted, using an index ratio of 1.00032, for inflation during the July 15-July 17 period.

TreasuryDirect investors purchased $30,646,000 of the TIPS – about a quarter of one percent of the total amount invested. This includes both the online and legacy versions of TreasuryDirect.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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