30-year TIPs on the way, more notes and bonds next week

The Treasury has announced today that more issuances are coming in its quarterly auction for government securities.  The US government hopes to increase its funding via auctions for 3-year notes amounting to $37 billion, for 10-year securities worth $23 billion and for 30-year bonds amounting to $15 billion. This is another record of $75bn, causing Treasuries to fall.
Some investors and analysts were also suprised to hear that the Treasury is considering the issuance of 30-year TIPs, securities whose yield is driven by inflation. In the past, issues have followed a maturity of 20 years.
Last week’s auction of non-TIPs securities were disappointing, showing potential waning of interest in them after $6.6 trillion have already been issued in just 9 months up to end of June. But with inflation expectations rising, demand for TIPs might grow bigger than its current $44bn share in the $6.6 trillion total.

The Treasury has announced today that more issuances are coming in its quarterly auction for government securities.  The US government hopes to increase its funding via auctions for 3-year notes amounting to $37 billion, for 10-year securities worth $23 billion and for 30-year bonds amounting to $15 billion. This is another record of $75bn, causing Treasuries to fall. The Treasury plans to auction the three-year notes on Aug. 11, the 10-year notes on Aug. 12 and the remaining on Aug. 13 for bonds.

From Bloomberg:

The Treasury’s current borrowing calendar is “sufficient” to meet the government’s needs and auction sizes are likely to rise in a “gradual manner” over the medium term, a Treasury statement in Washington said today. The Treasury signaled that issuance of Treasury Inflation-Protected Securities will rise in fiscal year 2010, and said it would consider replacing the 20- year TIPS with a 30-year security.

Some investors and analysts were also suprised to hear that the Treasury is considering the issuance of 30-year TIPs, securities whose yield is driven by inflation. In the past, issues have followed a maturity of 20 years.

Last week’s auction of non-TIPs securities were disappointing, showing potential waning of interest in them after $6.6 trillion have already been issued in just 9 months up to end of June. But with inflation expectations rising, demand for TIPs might grow bigger than its current $44bn share in the $6.6 trillion total.

From WSJ:

Demand for TIPS auctions this year has been robust, with last week’s $6 billion reopening of 20-year TIPS garnering the highest demand in two years. The TIPS didn’t entice only traditional Treasurys investors, but also those investing in stocks and commodities.

Read more HERE (WSJ) or HERE (Bloomberg).

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