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U.S. Inflation-Indexed 5-year Bonds sell at NEGATIVE YIELD FOR FIRST TIME EVER!

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Author Topic: U.S. Inflation-Indexed 5-year Bonds sell at NEGATIVE YIELD FOR FIRST TIME EVER!  (Read 475 times)
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« on: October 25, 2010, 06:49:00 pm »

Auction at negative yield still draws demand

 By Annalyn Censky, staff reporterOctober 25, 2010: 4:53 PM ET

NEW YORK ( -- For the first time ever, the government auctioned off 5-year inflation-indexed Treasuries at a negative yield Monday, as investors bet rising prices will be an issue in the next five years.

For more than three weeks, bond traders have focused on forecasts that the Fed will announce a second major round of asset purchases in November in an effort to stimulate the American economy.

1Email Print CommentAnd during a $10 billion auction of 5-year Treasury Inflation Protected Securities, or TIPS, at a negative 0.55% yield, it was clear bond traders think the Fed will be successful at spurring inflation, said Kim Rupert, a fixed income analyst with Action Economics.

So why would bond traders opt for negative returns?


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