Thursday, January 20, 2011

Today's TIPS Auction Results

I participated in the 10-Year TIPS auction today.

The 1.170% yield was much higher than anticipated.

Treasurys fall after auction, U.S. data

It was “not a good auction at all,” said Richard Gilhooly, director of rates strategy at TD Securities. “This appears to be a sound rejection of the need for inflation protection.”

It was a good auction for me. It's not like I was rooting for a lower rate.

The 29-Year TIPS I bought earlier this week is being taken out behind the woodshed and old-yellered. I'm fine with that. As I said when I bought it, I'm holding until maturity anyway so it really doesn't matter to me what other people are willing to pay for it.

Further, I am still planning to make a major purchase in February's 30-Year TIPS auction outside of my IRA. Bring on the higher rates!

Heck, if this continues we might even see something better than a 0.0% rate on I-Bonds by the end of the year. Wouldn't that be something.

Higher rates? The market thinks inflation protection isn't needed? As a saver I am certainly not complaining.

As a side note, I still lean deflationary.

9 comments:

Mr Slippery said...

I also participated in the TIPS auction today and was pleasantly surprised at the final price and yield. The TIPS is in my IRA and I plan to hold til maturity.

The whole curve moved up a lot today and I bought some cheap munis at the end of the day (cheap if they don't keep falling in price).

A little odd that bond yields were up so much today given a weak stock market. Markets don't provide useful information any more. Everything is too distorted.

Stagflationary Mark said...

Mr Slippery,

"A little odd that bond yields were up so much today given a weak stock market. Markets don't provide useful information any more. Everything is too distorted."

It makes more sense if you read this.

EMERGING MARKETS-Brazil's real up on rate hike; pesos dip

The central bank increased the benchmark Selic rate BRCBMP=ECI to 11.25 percent from 10.75 percent late on Wednesday, making it clear that more rate hikes are to come.

It would seem that both stock and bond investors were spooked by rising rates.

getyourselfconnected said...

Mark,
can I borrow, I mean steal the gold vs commodities charts for a post tonight? I will give full credit and a link of course!

Stagflationary Mark said...

GYSC,

I would welcome it. I never have a problem with people linking to me even if they copy the entire post.

The only thing that ever bothered me was someone taking the picture of my dog from my site and using it on their blog without even linking to me! That was a bit over the top.

getyourselfconnected said...

HA! I remeber that one. 'Illusion of Prosperity' has also been getting mileage as of late.

Thanks for the go ahead, you know i like to check first.

Stagflationary Mark said...

GYSC,

'Illusion of Prosperity' has also been getting mileage as of late.

There's an Illusion of Prosperity bubble. I'm tempted to short me, lol.

The Chinese Dragon and the American Eagle

Cutting production costs meant a flood of cheap products which gave the illusion of prosperity, without the substance. The Wal-Mart effect.

America’s brutal downward slide

Until the housing and financial bubbles burst, of course, we enjoyed the illusion of prosperity through the days of wine and credit.

Albert Edwards, SocGen bear, takes a bite out of China

The middle classes have been "totally shafted" by a house price bubble that created the illusion of prosperity.

Inspire and lead us, Governor

We frequently suffer from the illusion of prosperity while we are mesmerized by economic indicators.

Hahaha! I like that last one best.

mab said...

There's an Illusion of Prosperity bubble.

Does that mean we all can't CONtinue following the Greensham Doctrine and borrow our way to prosperity?

Stagflationary Mark said...

mab,

We can('t)! I'm trying to hedge my bets here. ;)

mab said...

I'm trying to hedge my bets here.

The Fed spent decades sponsoring Wall St. lies and ended up as the ultimate hedge.

When Bernanke says "We had no other choice" it is an admission of the ponzi nature of the eCONomy that he and Greensham enabled Wall St. to create.

The thing that shocks me most is how little public outrage there was/is.

Word verification: CONnazed. What else needs to be said. They mock me!