Treasury $14 B 10-year TIPS preview: the auction outlook is mixed.
Treasury $14 B 10-year TIPS preview: the auction outlook is mixed. The wi trades at 0.275%, having cheapened about 2 bps on the day but it's richer versus the 0.567% stop from the $11 B reopening from May, as well as the 0.919% from the $13 B January new issue. The breakeven has steepened to 175.8 bps, up from the 162 bp narrows from June 17. That's a positive. But the outlook on inflation is pretty mixed, wtih the FOMC worried about a continued weak trend, while various gauges have shown some pick-up, including the recent CPI beat. There's usually very good demand from overseas accounts and that should continue. The May reopening stopped at 0.567% and garnered a 3.07 cover and a 57.0% indirect bid. The $13 B January new issue was awarded at 0.919% and had a 2.42 cover and a 69.1% indirect.