The U.S. Treasury Department recently held an auction for $24 billion in new five-year Treasury Inflation-Protected Securities (TIPS, Financial), with a winning yield of 1.670%. This yield is approximately 2 basis points higher than the pre-auction trading levels but marks the lowest yield since April 2023.
Following the auction, TIPS underperformed compared to nominal bonds. The percentage of allocations awarded to primary dealers increased to 7.89%, while indirect bidder allocations dropped to 74.8%. Direct bidders secured 17.3% of the issuance. The bid-to-cover ratio stood at 2.40, slightly below the previous three-auction average of 2.55.
