20-year TIPS auction yield is 2.42%
Wednesday, January 24th, 2007
Categorized as: TIPS
The high yield was 2.420% in the Treasury’s 20-year TIPS auction held yesterday. The actual interest rate that will be paid by the investment is 2.375% (2-3/8%). Consequently, the price for a $1,000 bond was set at $992.13485.
The bonds will have interest payment days of January 15 and July 15, so investors also have to prepay interest of $1.04891 per bond to cover the interest between January 15 and the bond’s issue date, January 31. This prepayment will be reimbursed to investors in the July interest payment.
Thus the total cost to TreasuryDirect investors will be $993.18376 per bond.
Both the price and yield have been adjusted, using an index ratio of 0.99923, for inflation during the Jan 15-Jan 31 period.
TreasuryDirect investors purchased $2,191,000 of the TIPS – about 2.5 hundredths of one percent of the total amount invested. This includes both the online and legacy versions of TreasuryDirect.