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Wednesday, September 8, 2010

10-Year U.S. Treasury Auction Results

Article by Kirk Lindstrom - & Kirk's Two Investment Letters
Today's 10-Yr U.S. Treasury auction results

Today the US Treasury Department said it received bids totaling more than $67 billion for the $21 billion worth of 10-year (technically 9-years and 11-Months) notes sold. Thus the bid-to-cover ratio was 3.21, up from 3.04 for the 10-month auction on August 11. This indicates the demand for U.S. debt remains healthy.
10-Yr U.S. Treasury auction summary:
  • Term and Type of Security: 10-Year Note
  • CUSIP Number: 912828NT3
  • Series E-2020
  • Interest Rate 2-5/8%
  • High Yield = 2.730%
  • Allotted at High 10.57%
    (All tenders at lower yields were accepted in full.)
  • Price 99.086655
  • Accrued Interest per $1,000 = $0.07133
  • Median Yield = 2.669%
    (50% of the amount of accepted competitive tenders was tendered at or below that yield.)
  • Low Yield = 2.600%
    (5% of the amount of accepted competitive tenders was tendered at or below that yield)
  • Issue Date August 16, 2010
  • Maturity Date August 15, 2020
  • Original Issue Date August 16, 2010
  • Dated Date August 15, 2010
Bid-to-Cover Ratio: $67,438,329,700/$21,000,009,700 = 3.21

More Information:
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Related ETFs:
  • iShares Barclays 1-3 Year Treasury Bond - SHY
  • iShares Barclays 3-7 Year Treasury Bond - IEI
  • iShares Barclays 7-10 Year Treasury - IEF
  • iShares Barclays 10-20 Year Treasury Bond - TLH
  • iShares Barclays 20+ Year Treas Bond - TLT
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I am lucky. I have enough cash flow from my Two Investment Letters, people clicking ads on my blogs and websites plus commissions for products I recommend that I don't need yield to live on. (That is my goal is capital appreciation on the equity side and capital preservation, not yield, on the fixed side.) Thus, I take very little interest rate risk.  I've sold all my bonds and bond funds not indexed to inflation with my own money and in  "Kirk Lindstrom's Investment Letter." 

My personal iBond portfolio currently yields 5.43% (Majority are from Oct. 2001) but of course, I only get the interest at maturity, a great way to defer taxes.  The TIPS fund I got for my Vanguard ROTH by selling the GNMA fund is up 18.4% in under 2 years.  I also hold individual TIPS and a significant holding in the TIPS fund at Fidelity, FINPX, that is up 25.8%.  I suspect those TIPS funds will give back some when rates normalize, but rates probably won't normalize without a significant inflation component so I expect they will do better than bond funds not indexed to inflation.

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