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2026-09-17 23:08:09
[US$19 Billion 10-Year TIPS Auction Imminent, Yield Expected to Hit Highest Level Since 2008] The US Treasury will auction US$19 billion of 10-year Treasury Inflation-Protected Securities (TIPS) at 1 p.m. New York time on Wednesday. The yield on these bonds is expected to reach its highest level since the 2008 financial crisis. Currently, the 10-year TIPS yield is approximately 2.63%, having touched 2.69% intraday on Wednesday, the highest since November 2008. The yield in a similar auction in July reached 2.438%, setting a record in nearly 18 years at that time. The auction price is expected to be about 0.5 basis points higher than the July issuance price. Since the mid-year oil price rebound, TIPS have outperformed traditional nominal Treasury bonds, but their performance lagged after the Fed's rate hike on Wednesday, before rebounding somewhat on Thursday as oil prices fell. So far this year, the yields on 10-year TIPS and nominal Treasury bonds have risen by 41 and 48 basis points respectively, widening the spread between them (i.e., the 10-year breakeven inflation rate) from 2.23% to 2.42%, before falling back to around 2.31% on Thursday. JPMorgan interest rate strategists pointed out that high real yields, reasonable valuations, and continued inflows into inflation-hedging assets should help support this bond auction. Latest data shows that the US CPI rose 3.4% year-on-year in August, and core CPI rose 2.4%, both in line with market expectations. As of the week ending September 2, TIPS primary dealers' net long positions were $2.92 billion, slightly below the average of $3 billion over the past year.
