20-year TIPS available Tuesday, July 24

Thursday, July 19th, 2007
Categorized as: Yesterday's News (old post archive)

The Treasury will offer $6 billion in 20-year TIPS at auction on Tuesday, July 24. This is a reopening of the January 20-year TIPS auction, so the term on these is really 19 years and six months. The January 20-year TIPS have an interest rate of 2-3/8% (2.375%). The actual rate for 20-year TIPS is currently running over 2.6%, so the price of these bonds will be reduced to make up the difference.

Like Series I Savings Bonds, TIPS are a Treasury-issued inflation-protected security. Among their many differences, TIPS typically have a higher base interest rate than I bonds. However, only very experienced investors should participate in this auction. 20-year TIPS are extremely volatile.

To purchase TIPS at the auction, log on to your TreasuryDirect account and place an order before noon Eastern Time on the 24th. TIPS are available in $1,000 increments.

As a TreasuryDirect investor, you won’t actually place an auction bid. Large financial institutions do that outside of TreasuryDirect. However, you will receive the amount of TIPS you order at the highest interest rate determined in the auction. The actual price, yield, and rate of the investment won’t be known until after the auction.

As of yesterday, the Treasury calculated the 20-year yield of outstanding TIPS at 2.63%. Daily Treasury Real Yield Curve Rates is a web page the Treasury updates daily with current calculated yields for specific TIPS terms.

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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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