5-year TIPS auction yield is 2.379%
Tuesday, April 25th, 2006
Categorized as: TIPS
The high yield was 2.379% in the Treasury's 5-year TIPS auction 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 was $1,000.67(434).
The bonds will have interest payment days of April 15 and October 15, so investors also have to prepay interest of $0.84(431) per bond to cover the period from April 15 to the bond's issue date, April 28. This prepayment will be reimbursed to investors in the October 15 interest payment.
Thus the total cost to TreasuryDirect investors will be $1,001.52 per bond.
Both the price and yield have been adjusted, using an index ratio of 1.00087, for inflation during the April 15-April 28 period.
TreasuryDirect investors purchased $35,617,000 of the TIPS - about a third of one percent of the total amount invested. This includes both the online and legacy versions of TreasuryDirect.
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I've participated in the auction, and I gather the rate was pretty good. I feel like this was a good hedge to the I bond fixed rate guessing game. Anyone else participate?