Investors scoop up US 10-year TIPS supply

22 Jan, 2015

NEW YORK: Investors bought a majority of the $15 billion worth of US 10-year Treasury Inflation-Protected Securities offered on Thursday, suggesting demand for higher-yield US bonds as European yields hit record lows.

The risk to own US TIPS was reduced earlier after the European Central Bank said it will embark on a bond purchase program, worth 60 billion euro a month, aimed at averting deflation spreading across the euro zone.

The latest ECB stimulus move was also seen critical in stemming downward price pressure in Europe from exacerbating already weak price growth in the United States.

The latest 10-year TIPS issue fetched a yield of 0.315 percent, the lowest the US government has paid on this maturity since an auction in July 2014.

Foreign central banks, fund companies and other indirect bidders bought 63.95 percent of the 10-year TIPS supply, which was their largest share since an auction last May.

Large fund managers, smaller bond dealers and other direct bidders bought 10.2 percent of the 10-year TIPS supply, which was their biggest share since an auction in July.

Primary dealers or the top 22 Wall Street firms that do business directly with the Federal Reserve bought 25.85 percent, their smallest share since these figures were available going back to 2003, according to Treasury data.

Copyright Reuters, 2015

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