Treasury 10-year TIPS preview: the offering should see moderate demand
Treasury 10-year TIPS preview: the offering should see moderate demand, though indirect bidding should be supportive. The market has richened, with the wi having slipped to 0.758%. That compares to the 0.767% on the benchmark. There's risk the issue won't achieve the hoped for 0.750% coupon, which hasn't been seen since May 2011. The drop in commodity prices, and especially oil and gold, may limit buying. The 10-year breakeven has dropped to 207 bps and change, and is down from 215 bps in early June, and a 2018 high of 2.19 bps from mid-May. Although CPI and other inflation indicators have picked up, a fact acknowledged by the Fed, further acceleration on a y/y basis looks minimal for now. The $11 B May reopening garnered a 2.42 cover and a 64.3% indirect bid. The January new issue was solid and had a 2.69 cover and 78.9% indirect.