Free Republic
Browse · Search
General/Chat
Topics · Post Article

Skip to comments.

US Sells 10-Year TIPS At Record Negative Yield
NASDAQ ^ | 3/23/12 | CYNTHIA LIN

Posted on 03/24/2012 10:03:05 PM PDT by RC one

NEW YORK -(Dow Jones)- The U.S. government sold debt at a record low yield Thursday, as buyers accepted a negative payment for the second time in history on 10-year notes that shield them from the threat of inflation.

The $13 billion offering of 10-year Treasury Inflation Protected Securities, or TIPS, garnered decent interest. It drew a bid-to-cover ratio of 2.81, compared to a 2.74 average over the last six sales of the same kind.

Buyers accepted a negative 0.089% yield, reflecting their willingness to pay a premium to own U.S. government debt, perhaps on the belief that they will be compensated with rising inflation down the line. In January, the securities sold at a -0.046% yield.

TIPS are designed to protect buyers from the threat of rising prices. The value of these securities increases as the consumer price index moves higher. Inflation is a risk to bondholders because it erodes the value of their stream of fixed income over time.

Direct bidders, a group comprising domestic banks and fund managers, purchased 21.1% of the sale. This is higher than the 14.1% recent average. Indirect bidders, often a gauge of foreign interest, scooped up 40.4% versus their 36.8% average.

(Excerpt) Read more at nasdaq.com ...


TOPICS: Business/Economy
KEYWORDS: economy; inflation

1 posted on 03/24/2012 10:03:16 PM PDT by RC one
[ Post Reply | Private Reply | View Replies]

To: RC one

CPI adjustment won’t protect these from inflation. They should be adjusted with the expansion of the money supply.


2 posted on 03/24/2012 10:09:21 PM PDT by Born to Conserve
[ Post Reply | Private Reply | To 1 | View Replies]

To: RC one

Looking back, how valid have the relative sales of TIPS been as an early warning of future inflation?


3 posted on 03/24/2012 10:12:14 PM PDT by Graewoulf (( obama"care" violates the 1890 Sherman Anti-Trust Law, AND is illegal by the U.S. Constitution.))
[ Post Reply | Private Reply | To 1 | View Replies]

To: Graewoulf

it seems like the big money powers are anticipating inflation. We are in uncharted waters currently. Looking backwards might not be useful.


4 posted on 03/24/2012 10:18:48 PM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: RC one

TIPS (bump)


5 posted on 03/24/2012 10:19:22 PM PDT by blam
[ Post Reply | Private Reply | To 1 | View Replies]

To: Born to Conserve

you got it.


6 posted on 03/24/2012 10:21:11 PM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: RC one

It is time to prepare to leave. How long have we?


7 posted on 03/24/2012 11:21:53 PM PDT by Porterville (Methink'st thou art a general offence and every man should beat thee.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: RC one
Unfortunately, we are in charted waters, RC. Google long-wave contraction, and watch Kyle Bass' presentations to AmeriCatalyst over the last few years.

We're 4 years into a decade of pain. No joke.

8 posted on 03/24/2012 11:24:53 PM PDT by TheWriterTX (Riding the Long-Wave Economic Contraction, Baby!)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Porterville

It’s time to by more gold and silver.


9 posted on 03/24/2012 11:34:53 PM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Porterville

It’s time to buy more gold and silver.


10 posted on 03/24/2012 11:35:22 PM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: RC one; Porterville

You can’t eat gold or silver. Buy land; at least you can grow your own edibles.


11 posted on 03/24/2012 11:50:06 PM PDT by SatinDoll (No Foreign Nationals as our President!)
[ Post Reply | Private Reply | To 10 | View Replies]

To: SatinDoll

you can’t run with land either but I agree, farm land can be an excellent investment all around.


12 posted on 03/24/2012 11:52:57 PM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 11 | View Replies]

To: RC one

(Audio)

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/3/23_Michael_Pento.html


13 posted on 03/25/2012 12:49:05 AM PDT by Razzz42 (`)
[ Post Reply | Private Reply | To 1 | View Replies]

To: RC one
you can’t run with land either but I agree, farm land can be an excellent investment all around.

Land is worth anything only as long as you are able to work it and most importantly defend it. Lacking that it's just a hole in the ground into which you throw money.

After TSHTF the price of land (that trades today for, say, a million dollars) will drop down to the cost of a few handgun rounds that the new owner needs to burn to remove previous owners. Why would anyone give you anything for land if they can simply take it? If you own 300 acres of pasture, can you defend it and your cattle? Can you even *know* if a trespassing gang has shot one of your cows and is loading it into the truck? If you do, how do you approach a gang in an open field? What if the gang brought 20 trucks and 100 soldiers to steal your entire herd? A single man, unless he is one of those movie heroes, has no chance of getting out of that alive, let alone saving the cattle.

Unfortunately investments for peaceful times and investments for TSHTF times are very different. When TSHTF the best currency is high-tech items that are hard to obtain in a destroyed society - such as medical supplies, ammo, weapons. Everything else - even food - is renewable and is better obtained when you need it, by trading one of those items. A suitcase full of drugs will be priceless.

IMO, holding US debt, TIPS or not, is not very valuable. The government can print as much of the money as it wants, and the same government tells you what the inflation rate is. In essence, you are buying a paper where the issuer is free to pay you whatever he wants.

The trick is to invest as if the time of peace is all upon us, but be ready to pull the roots out and reinvest into TSHTF commodities as soon as it becomes prudent. Needless to say, the longer you wait the less you can recover from your peace time investments; but if you wait too little then your TSHTF investments - which pay no interest - only take space in your basement, and their "use before" dates come closer and closer.

14 posted on 03/25/2012 1:36:36 AM PDT by Greysard
[ Post Reply | Private Reply | To 12 | View Replies]

To: Greysard

you can purchase 20 acres of farm land and lease it out to a farmer who will basically pay your property taxes and then manintain the land for you. And because God ain’t making anymore land, you can be reasonably sure that your land will appreciate especially in an inflationary environment. eventually you can sell it for profit. Since it’s real estate, you can shield yourself from any taxes that may result from the profit by using the 1031 exchange. Of course, it’s much easier to shield yourself from those taxes when you invest in physical gold/silver.


15 posted on 03/25/2012 1:51:02 AM PDT by RC one (may the strongest man win.)
[ Post Reply | Private Reply | To 14 | View Replies]

To: Born to Conserve

These might be a real bargain, depending upon the inflation adjustment limitations on the yields.

Don’t worry. The Fed Reserve will purchase them all anyway. They will print more electronic money to purchase the worthless paper!


16 posted on 03/25/2012 3:25:04 AM PDT by tired&retired
[ Post Reply | Private Reply | To 2 | View Replies]

To: Born to Conserve
CPI adjustment won’t protect these from inflation. They should be adjusted with the expansion of the money supply.

Indeed, although I wouldn't trust even that. The banksters have totally captured the reguulators and no gov't figures can be trusted. They should be indexed to the price of gold.

17 posted on 03/25/2012 5:31:51 AM PDT by Paine in the Neck (Romney's judicial appointments were more radical than Obama's)
[ Post Reply | Private Reply | To 2 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
General/Chat
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson