5-year TIPS auction yield is 2.691%
Monday, October 23rd, 2006
Categorized as: TIPS
The high yield was 2.691% in the Treasury’s auction of additional April 2006 5-year TIPS, which was held this morning. The actual interest rate that will be paid by the investment is 2.375% (2 3/8%). The price for a $1,000 bond, after adjusting for inflation since April, was $1,013.65(114). (The unadjusted price was $986.80(030).)
The bonds will have interest payment days of April 15 and October 15, so investors also have to prepay interest of $1.07(237) per bond to cover the period from October 15 to the bond’s issue date, October 31. This prepayment will be reimbursed to investors in the April 15 interest payment.
Thus the total cost to TreasuryDirect investors will be $1,014.72 per bond.
Both the price and yield were adjusted, using an index ratio of 1.02721, for inflation during the April 15-October 31 period.
TreasuryDirect investors purchased $21,473,000 of the TIPS – about one-fourth of one percent of the total amount invested. This includes both the online and legacy versions of TreasuryDirect.