30 year TIPs auction announcement October 17

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grok87
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30 year TIPs auction announcement October 17

Post by grok87 »

Hi Bogleheads,
Just a heads up that there is a 30 year TIPS auction coming up later this month. The auction will be announced on October 17th- that's when you can start placing your orders. The actual auction date is October 24th.
I'm hoping for a 1.5% real yield. But I fear with all that is going on in Washington there may be more pressure for yields to drop from here (currently the 30 year tips yield is 1.35%) than rise.
I will be a buyer at any real yields above 1%.

Anybody else planning to buy? and at what real yield level?

cheers,
RIP Mr. Bogle.
FillorKill
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Re: 30 year TIPs auction announcement October 17

Post by FillorKill »

I'm in at real yield of 2.5 or greater on the 30. It may be a while.
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Re: 30 year TIPs auction announcement October 17

Post by mikem »

I wish I could see a real good reason for the interest rate to move off "0" and the inflation factor rise above 1.18% annual. I will wait for the auction but will probably continue with CD ladders for the foreseeable future. Thanks for the reminder about the auction.
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Re: 30 year TIPs auction announcement October 17

Post by Doc »

The most valuable attribute of TIPS is to be able to lock in attractive long term rates without taking on inflation risk. Current rates are not attractive. I'm waiting for the "five" next April.
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Re: 30 year TIPs auction announcement October 17

Post by Aptenodytes »

I'm continuing to buy the 10-years, but I be too old to be loading up on 30-years. Even if I were 20 years younger, I can't see how I'd find any love at that spot on the yield curve.
Iorek
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Re: 30 year TIPs auction announcement October 17

Post by Iorek »

How do the Treasury auctions work? I was under the impression that you don't know what interest rate you will get when you submit a request to participate?
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grok87
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

Iorek wrote:How do the Treasury auctions work? I was under the impression that you don't know what interest rate you will get when you submit a request to participate?
That is correct. But its usually not too far off where the bonds are trading in the secondary market at the time of the auction. This auction is a reopening of the february auction earlier this year...
cheers,
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

Here is a plot of the yield on the Feb 2043 30-year TIPS (in blue) from the FRED web site. For comparison I've added a plot of the yield on the Jan 2023 10-year TIPS (in red) over the same time period. (To make the comparison easier to see, I've added 1% point to the 10-year's yield.) The graph should automatically update itself, with a day or two lag, as time goes by.
Image
The 30-year yield rose about 1.2% points from a low of 0.4% in April to a peak of 1.6%. The 10-year yield rose more: about 1.6% points from a low of -0.8% in April to a peak of +0.8%. Yields on both have fallen off from their peaks, but are still substantially higher than their April lows.
mikem wrote:I wish I could see a real good reason for the interest rate to move off "0" and the inflation factor rise above 1.18% annual.
It sounds like you're referring to I Bonds, Mike, not to 30-year TIPS.
Doc wrote:I'm waiting for the "five" next April.
You don't have to wait that long, Doc. A re-opening of the April 2018 TIPS is tentatively scheduled for December 19th. (See Treasury Tentative Auctions PDF file.)
grok87 wrote:
Iorek wrote:How do the Treasury auctions work? I was under the impression that you don't know what interest rate you will get when you submit a request to participate?
That is correct. But its usually not too far off where the bonds are trading in the secondary market at the time of the auction. This auction is a reopening of the february auction earlier this year.
You can check the yield in the secondary market from the following two web sites, Lorek. The one to look for is the Feb 15, 2043 with a 0.625% coupon.
WSJ Treasury Inflation-Protected Securities shows all outstanding TIPS and is updated at the end of the trading day.
Bloomberg United States Government Bonds shows four outstanding TIPS, including the Feb 2043, and is updated throughout the trading day.
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Re: 30 year TIPs auction announcement October 17

Post by grayfox »

The price of the 2043 Feb 15 0.625% has fallen to 81.28/82.06 in order to yield 1.364%

http://online.wsj.com/mdc/public/page/2_3020-tips.html

If you buy the next 30-year TIP at YTM=1.3%, and then rates rise to 2%, it's price will also fall a lot, like -20%. Of course, rates can fall back to 0.6% and then you can sell it at a 20% profit. When you roll the dice you can get ⚄ ⚁ or ⚀ ⚀

Just saying that if you buy the 30-year, anticipate a -20+% drawdown. If that doesn't bother you, and you 1.3% real is acceptable over 30 years, go for it.
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Re: 30 year TIPs auction announcement October 17

Post by grayfox »

Here's a question. Wouldn't it be better to buy the Feb-2043 0.625% at 82 than the new one that will be close to 100?

In other words, buy the discounted bond instead of the par bond? That way you know it's going up in price, eventually, plus you collect a coupon payment every six months. What do you think?
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Re: 30 year TIPs auction announcement October 17

Post by FillorKill »

grayfox wrote:Here's a question. Wouldn't it be better to buy the Feb-2043 0.625% at 82 than the new one that will be close to 100?

In other words, buy the discounted bond instead of the par bond? That way you know it's going up in price, eventually, plus you collect a coupon payment every six months. What do you think?
The price of that capital gain of 18 upon maturity is slightly smaller coupon payments. The two bonds would be priced to be equal although the composition of the payout over the life of the two bonds would be slightly different. Par bond = slightly higher coupon payments. Discount bond = slightly lower coupon payments and the adjustment to par value on maturity.
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

grayfox wrote:Wouldn't it be better to buy the Feb-2043 0.625% at 82 than the new one that will be close to 100?
What "new one" are you thinking of, grayfox? The upcoming auction is a "re-opening" of the Feb 2043's first auctioned 8 months ago. Whether you bought them today in the secondary market or later in the auction, you'd be getting the same bonds. Assuming the Treasury keeps its recent pattern, there won't be a "new" 30-year auction until a Feb 2044 is issued next February. Whatever yields are at that time, the coupon will be set so the price will be close to 100.

But I suspect what you're really asking is whether it's better to buy a long-term TIPS with a small coupon or one with a big coupon. For example, instead of buying the Feb 2043 with a 0.625% coupon, one could buy the Feb 2041 which has a 2.125% coupon. The advantage of the 2043 is reduced reinvestment risk. If interest rates were to fall, one has less coupon interest to reinvest. Much of the 2043's yield to maturity results from the purchase price discount and its rise to par at maturity is "locked in" regardless of the course of interest rates.

But the flip side of reduced reinvestment risk is increased interest rate risk. If interest rates were to rise, the 2043 would suffer a larger decrease in market value, as shown in the last row below.

Code: Select all

02/15/2041     02/15/2043      Maturity
    2.125%         0.625%      Coupon
    1.309%         1.364%      Yield 10/3/2013
  118.711         82.172       Corresponding price
   21.317         26.322       Modified Duration

    0.609%         0.664%      Yield 0.7% points lower
  138.148         98.961       Corresponding price
  +16.4%         +20.4%        Change in price

    2.009%         2.064%      Yield 0.7% points higher
  102.431         68.436       Corresponding price
  -13.7%         -16.7%        Change in price
Even though it matures only 2 years later, the 2043's smaller coupon causes its duration to be about 5 years more. This is reflected in its greater sensitivity to interest rate changes. YIelds are from WSJ TIPS Quotes 10/3/2013. Prices and duration are calculated using www.ficalc.com.
Carpe
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

grayfox wrote:The price of the 2043 Feb 15 0.625% has fallen to 81.28/82.06 in order to yield 1.364%

http://online.wsj.com/mdc/public/page/2_3020-tips.html

If you buy the next 30-year TIP at YTM=1.3%, and then rates rise to 2%, it's price will also fall a lot, like -20%. Of course, rates can fall back to 0.6% and then you can sell it at a 20% profit. When you roll the dice you can get ⚄ ⚁ or ⚀ ⚀

Just saying that if you buy the 30-year, anticipate a -20+% drawdown. If that doesn't bother you, and you 1.3% real is acceptable over 30 years, go for it.
Fair enough, but the same issue can be considered on more moderate terms. Some/many that will be purchasing on the next auction, already have purchased on from previous auctions. Further, if laddering is involved, it can be assumed that more will be purchased at a later date. So what if the price goes down! Take advantage of it on the next purchase if desired. I apprecaite that there are those that prefer to wait and buy nothing, but it is also possible to buy some and be prepared to buy more (if it's considered time to back up the truck), or just rebalance (and stop trying to time the market so much).
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

grok87 wrote:Hi Bogleheads,
Just a heads up that there is a 30 year TIPS auction coming up later this month. The auction will be announced on October 17th- that's when you can start placing your orders. The actual auction date is October 24th.
I'm hoping for a 1.5% real yield. But I fear with all that is going on in Washington there may be more pressure for yields to drop from here (currently the 30 year tips yield is 1.35%) than rise.
I will be a buyer at any real yields above 1%.

Anybody else planning to buy? and at what real yield level?

cheers,
Yes. Currently, no constraints on yield level - just an incremental addition based on existing plan.

Slàinte,
Carpe: pick, pluck, pluck off, gather
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Re: 30 year TIPs auction announcement October 17

Post by Doc »

#Cruncher wrote:
Doc wrote:I'm waiting for the "five" next April.
You don't have to wait that long, Doc. A re-opening of the April 2018 TIPS is tentatively scheduled for December 19th. (See Treasury Tentative Auctions PDF file.)
:happy
I have lots of other reasons to wait.

1) I already own the Jan 2018.
2) I have a note maturing in January.
3) I need some dry powder for a few months early next year to cover some equity swaps.
4) Most important the brokers have to keep track of bond amortization/accretion for purchases made after Jan 1, 2014. (Unless they have delayed it again.) Yea, I know someone will say "tax advantaged account" but short Treasuries are actually more tax efficient than equities under the current QE environment for many of us.

Once the brokers have to keep track of cost basis there is very little reason not to buy Treasuries on the secondary market so when the auctions occur becomes not very relevant for even modest portfolios.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
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Re: 30 year TIPs auction announcement October 17

Post by longview »

#Cruncher wrote:
grayfox wrote:Wouldn't it be better to buy the Feb-2043 0.625% at 82 than the new one that will be close to 100?
What "new one" are you thinking of, grayfox? The upcoming auction is a "re-opening" of the Feb 2043's first auctioned 8 months ago. Whether you bought them today in the secondary market or later in the auction, you'd be getting the same bonds. Assuming the Treasury keeps its recent pattern, there won't be a "new" 30-year auction until a Feb 2044 is issued next February. Whatever yields are at that time, the coupon will be set so the price will be close to 100.

But I suspect what you're really asking is whether it's better to buy a long-term TIPS with a small coupon or one with a big coupon. For example, instead of buying the Feb 2043 with a 0.625% coupon, one could buy the Feb 2041 which has a 2.125% coupon. The advantage of the 2043 is reduced reinvestment risk. If interest rates were to fall, one has less coupon interest to reinvest. Much of the 2043's yield to maturity results from the purchase price discount and its rise to par at maturity is "locked in" regardless of the course of interest rates.

But the flip side of reduced reinvestment risk is increased interest rate risk. If interest rates were to rise, the 2043 would suffer a larger decrease in market value, as shown in the last row below.

Code: Select all

02/15/2041     02/15/2043      Maturity
    2.125%         0.625%      Coupon
    1.309%         1.364%      Yield 10/3/2013
  118.711         82.172       Corresponding price
   21.317         26.322       Modified Duration

    0.609%         0.664%      Yield 0.7% points lower
  138.148         98.961       Corresponding price
  +16.4%         +20.4%        Change in price

    2.009%         2.064%      Yield 0.7% points higher
  102.431         68.436       Corresponding price
  -13.7%         -16.7%        Change in price
Even though it matures only 2 years later, the 2043's smaller coupon causes its duration to be about 5 years more. This is reflected in its greater sensitivity to interest rate changes. YIelds are from WSJ TIPS Quotes 10/3/2013. Prices and duration are calculated using www.ficalc.com.
One other consideration is the deflation risk of the above-par TIP, right? They both have a locked floor of par -- so the premium TIP can lose value due to deflation.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: 30 year TIPs auction announcement October 17

Post by Doc »

longview wrote:One other consideration is the deflation risk of the above-par TIP, right? They both have a locked floor of par -- so the premium TIP can lose value due to deflation.
I'm not really following this thread in detail but deflation fears apparently had a noticeable impact on TIPS prices during the 2008 banking crisis. TIPS prices dropped while similar duration nominal Treasuries rose and on the run TIPS issues held up better than off the run issues. I think the situation went away when the banking situation cleared up.

There was a lot of chatter from our bond gurus here on whether the TIPS price drop then was due to deflation fears or the lower liquidity of TIPS compared to nominal.
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

BBL wrote:I'm in at real yield of 2.5 or greater on the 30. It may be a while.
Probably so. real yields for long tips got to above 3% in late '08.
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

Carpe wrote:
grayfox wrote:The price of the 2043 Feb 15 0.625% has fallen to 81.28/82.06 in order to yield 1.364%

http://online.wsj.com/mdc/public/page/2_3020-tips.html

If you buy the next 30-year TIP at YTM=1.3%, and then rates rise to 2%, it's price will also fall a lot, like -20%. Of course, rates can fall back to 0.6% and then you can sell it at a 20% profit. When you roll the dice you can get ⚄ ⚁ or ⚀ ⚀

Just saying that if you buy the 30-year, anticipate a -20+% drawdown. If that doesn't bother you, and you 1.3% real is acceptable over 30 years, go for it.
Fair enough, but the same issue can be considered on more moderate terms. Some/many that will be purchasing on the next auction, already have purchased on from previous auctions. Further, if laddering is involved, it can be assumed that more will be purchased at a later date. So what if the price goes down! Take advantage of it on the next purchase if desired. I apprecaite that there are those that prefer to wait and buy nothing, but it is also possible to buy some and be prepared to buy more (if it's considered time to back up the truck), or just rebalance (and stop trying to time the market so much).
+1
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

Carpe wrote:
grok87 wrote:Hi Bogleheads,
Just a heads up that there is a 30 year TIPS auction coming up later this month. The auction will be announced on October 17th- that's when you can start placing your orders. The actual auction date is October 24th.
I'm hoping for a 1.5% real yield. But I fear with all that is going on in Washington there may be more pressure for yields to drop from here (currently the 30 year tips yield is 1.35%) than rise.
I will be a buyer at any real yields above 1%.

Anybody else planning to buy? and at what real yield level?

cheers,
Yes. Currently, no constraints on yield level - just an incremental addition based on existing plan.

Slàinte,
thanks. so you're a buyer even at negative real yields? just curious...
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

longview wrote:
#Cruncher wrote:

Code: Select all

  02/15/2041     02/15/2043      Maturity
      2.125%         0.625%      Coupon
    118.711         82.172       Corresponding price
      1.06694        1.01626     Index ratio 10/7/2013 (not included in original post) (1)
  1,066.94       1,016.26        Principal value of $1,000 face (not included in original post)
One other consideration is the deflation risk of the above-par TIP, right? They both have a locked floor of par -- so the premium TIP can lose value due to deflation.
As I mention in item # 1 of my post, Re: Spot check my hypothetical TIPS buy please..., the price of a TIPS has nothing to do with its "deflation risk" (2). Rather, it is related to the inflation factor (aka index ratio) of the TIPS when it's purchased. The higher the index ratio, the bigger the "risk" (and the smaller the potential "bonus"). By coincidence, the Feb 2041 which has a higher price, also has a higher index ratio than the Feb 2043. Should you buy $1,000 face value today of the Feb 2041, the most you could lose at redemption is $66.94 no matter how much the CPI might fall. If you bought the Feb 2043 instead, the most you could lose would be $16.26.

So the Feb 2043 has a larger potential deflation bonus. But it's extremely unlikely that the deflation bonus would come into play for either TIPS. To do so, the CPI would have to decline more than 6.7% between now and 2041 or more than 1.6% between now and 2043. But since 1913 the longest period over which the CPI has declined is 26 years. For example from 20.9 in June 1920 it declined 10.5% to 18.7 in June 1946. (See Bureau of Labor Statistics - Consumer Price Index since 1913.)
  1. For index ratios of these two TIPS see 10/7/13 column in bottom rows of October 2013 Index Ratios.
  2. Deflation floor or deflation bonus might a better term since deflation isn't really a "risk" with TIPS. For more, see this nice post by nisiprius: Re: Are TIPs Poor Downside Protection?.
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grok87
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

real yield now at 1.39%. Looking good for 1.5% at auction, with some luck...
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

now at 1.41%- looking good for 1.5% at auction, you can place your orders on thursday/friday (i guess, not sure with the shutdown...)
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

grok87 wrote:
Carpe wrote:
Yes. Currently, no constraints on yield level - just an incremental addition based on existing plan.

Slàinte,
thanks. so you're a buyer even at negative real yields? just curious...
A negative real yield is certainly not preferred, but I so have some 10 Year TIPs with -ve YTM. These were purchased only after Ibond quotas were filled, which provided better returns at the time.

My strategy is to increase my holdings in TIPS and Ibonds over time, through accumulation phase and possibly even into decumulation, in a manner that will eventually fill out a reducing duration ladder. The allocation to each rung of the TIPS ladder is not aggressive and could be increased if real rates increase significantly. Over time, I would hope that there are not too many rungs with -ve or low real rates, and I certainly don't consider the occasional entry to be a problem - particularly if rates do eventually increase thereby presenting the possibility of "repairing" / supplementing rungs with additional purchases.

Looking at the current/recent daily Treasury real yield rates, only the 5 Years have -ve YTM:

http://www.treasury.gov/resource-center ... &year=2013
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grok87
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

Carpe wrote:
grok87 wrote:
Carpe wrote:
Yes. Currently, no constraints on yield level - just an incremental addition based on existing plan.

Slàinte,
thanks. so you're a buyer even at negative real yields? just curious...
A negative real yield is certainly not preferred, but I so have some 10 Year TIPs with -ve YTM. These were purchased only after Ibond quotas were filled, which provided better returns at the time.

My strategy is to increase my holdings in TIPS and Ibonds over time, through accumulation phase and possibly even into decumulation, in a manner that will eventually fill out a reducing duration ladder. The allocation to each rung of the TIPS ladder is not aggressive and could be increased if real rates increase significantly. Over time, I would hope that there are not too many rungs with -ve or low real rates, and I certainly don't consider the occasional entry to be a problem - particularly if rates do eventually increase thereby presenting the possibility of "repairing" / supplementing rungs with additional purchases.

Looking at the current/recent daily Treasury real yield rates, only the 5 Years have -ve YTM:

http://www.treasury.gov/resource-center ... &year=2013
i hear you. ibonds are limited. as a tips alternative, i'm using penfed cds. I figure the cheap put option may provide some inflation protection.
i can't bring myself to hold at negative real yields.
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

grok87 wrote:now at 1.41%- looking good for 1.5% at auction, you can place your orders on thursday/friday (i guess, not sure with the shutdown...)
now at 1.44%. 1.5% here we come...
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by longview »

So, if I spend my whole IRA on 30-year TIPS tomorrow... then I'll see what yield I wound up with next week after the auction settles? Do I have that right?

I'm ready to jump on anything positive as some inflation apocalypse insurance.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

longview wrote:So, if I spend my whole IRA on 30-year TIPS tomorrow... then I'll see what yield I wound up with next week after the auction settles? Do I have that right?

I'm ready to jump on anything positive as some inflation apocalypse insurance.
yep. real yield on the secondary market is now 1.40%
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

Here is the official announcement PDF file for the auction to take place next Thursday 10/24/2013. Since it's a reopening of an existing TIPS with only a 0.625% coupon, the price will be well below par. The exact figure will depend on the yield determined at the auction. Here is a table showing the price at various yields from 1.0% to 1.8%:

Code: Select all

   1.0%     1.1%     1.2%     1.3%     1.4%     1.5%     1.6%     1.7%     1.8%    Yield
  ------   ------   ------   ------   ------   ------   ------   ------   ------ 
  90.499%  88.133%  85.835%  83.601%  81.430%  79.321%  77.271%  75.278%  73.342%  Price
  920.56   896.50   873.12   850.40   828.32   806.86   786.01   765.74   746.04   Adj price @ 1.01721 index ratio 10/31/13
  921.89   897.83   874.45   851.73   829.65   808.19   787.34   767.07   747.37   Total cost incl $1.33 accrued interest
For example, if the yield came in at 1.4% and you ordered 10 bonds, your cost including accrued interest would be $829.65 X 10 = $8,296.50. I computed the prices and the accrued interest using Excel functions as explained in this post, Re: 30 year TIPs auction on June 20th, 1.25% real yield???.
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

#Cruncher wrote:Here is the official announcement PDF file for the auction to take place next Thursday 10/24/2013. Since it's a reopening of an existing TIPS with only a 0.625% coupon, the price will be well below par. The exact figure will depend on the yield determined at the auction. Here is a table showing the price at various yields from 1.0% to 1.8%:

Code: Select all

   1.0%     1.1%     1.2%     1.3%     1.4%     1.5%     1.6%     1.7%     1.8%    Yield
  ------   ------   ------   ------   ------   ------   ------   ------   ------ 
  90.499%  88.133%  85.835%  83.601%  81.430%  79.321%  77.271%  75.278%  73.342%  Price
  920.56   896.50   873.12   850.40   828.32   806.86   786.01   765.74   746.04   Adj price @ 1.01721 index ratio 10/31/13
  921.89   897.83   874.45   851.73   829.65   808.19   787.34   767.07   747.37   Total cost incl $1.33 accrued interest
For example, if the yield came in at 1.4% and you ordered 10 bonds, your cost including accrued interest would be $829.65 X 10 = $8,296.50. I computed the prices and the accrued interest using Excel functions as explained in this post, Re: 30 year TIPs auction on June 20th, 1.25% real yield???.
thanks #cruncher- that's very helpful
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by longview »

Thanks. Where does one find the inflation adjustment to go with that offering? ie, what's the deflation cushion?

I see "Adj price @ 1.01721" in #cruncher's post. Is that 1.7% inflation?

(although I think it's extreme doubtful we won't have net-inflation from now until now+30)
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
longview
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Re: 30 year TIPs auction announcement October 17

Post by longview »

Vanguard auction page shows an "Indicative Yield" of 1.364.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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grok87
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

longview wrote:Vanguard auction page shows an "Indicative Yield" of 1.364.
yes that's accurate. Yields are down a few bps today.
Just placed my order today for next weeks auction.
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

longview wrote:Where does one find the inflation adjustment to go with that offering? ... I see "Adj price @ 1.01721" in #cruncher's post. Is that 1.7% inflation?
Yes, that means the CPI has risen 1.7% from the 2/15/2013 "Dated Date" of the bond to the 10/31/2013 issue date. You can see it in several places:
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Re: 30 year TIPs auction announcement October 17

Post by longview »

Thanks much. I just bought some -- pretty strange to buy something in an IRA and not know how much it will cost... I left some cushion.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

yield now at 1.33%. not the 1.5% I was hoping for. I'm still buying at Thursdays auction though.
if others are interested I would get your orders in today or tomorrow. Not sure when the cutoff is...
cheers,
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by Doc »

grok87 wrote:yield now at 1.33%. not the 1.5% I was hoping for. I'm still buying at Thursdays auction though.
if others are interested I would get your orders in today or tomorrow. Not sure when the cutoff is...
cheers,
The bids are for the day of the auction.
Noncompetitive Closing Time 12:00 Noon ET
Competitive Closing Time 1:00 p.m. ET
http://www.treasurydirect.gov/instit/an ... 1017_1.pdf

Note; I believe Vanguard requires earlier times for submitting order.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
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Re: 30 year TIPs auction announcement October 17

Post by Aptenodytes »

longview wrote:Thanks much. I just bought some -- pretty strange to buy something in an IRA and not know how much it will cost... I left some cushion.
I once went negative in my Vanguard brokerage account, in spite of the cushion, when purchasing a 10-year TIPS. Vanguard just called and let me move some funds around to make up for it -- wasn't a hassle in that case but I doubt they would like people doing that as a matter of course.
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

grok87 wrote:yield now at 1.33%. not the 1.5% I was hoping for. I'm still buying at Thursdays auction though.
if others are interested I would get your orders in today or tomorrow. Not sure when the cutoff is...
cheers,
Thanks for the reminder. Just placed my order.
Carpe: pick, pluck, pluck off, gather
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Re: 30 year TIPs auction announcement October 17

Post by Angst »

Well, it's down to 1.29% now... :?
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

The yield came in at 1.330% at the auction today. Here is the Auction Results PDF file. The yield was up slightly from yesterday's close and down about 0.1% point from the June auction of this same TIPS:

1.304% - Yesterday's close - see last row of WSJ TIPS Quotes 10/23/2013
1.313% - Today's close - see last row of WSJ TIPS Quotes 10/24/2013 (edit 5:50 PM)
1.420% - June auction of same TIPS - see next to last row of 30 Year TIPS Auctions
Last edited by #Cruncher on Thu Oct 24, 2013 4:52 pm, edited 1 time in total.
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grok87
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Re: 30 year TIPs auction announcement October 17

Post by grok87 »

#Cruncher wrote:The yield came in at 1.330% at the auction today. Here is the Auction Results PDF file. The yield was up slightly from yesterday's close and down about 0.1% point from the June auction of this same TIPS:

1.304% - Yesterday's close - see last row of WSJ TIPS Quotes 10/23/2013
1.420% - June auction of same TIPS - see next to last row of 30 Year TIPS Auctions
Thanks. Not great, but I'll take it!
RIP Mr. Bogle.
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

#Cruncher wrote:The yield came in at 1.330% at the auction today. Here is the Auction Results PDF file. The yield was up slightly from yesterday's close and down about 0.1% point from the June auction of this same TIPS:

1.304% - Yesterday's close - see last row of WSJ TIPS Quotes 10/23/2013
1.420% - June auction of same TIPS - see next to last row of 30 Year TIPS Auctions
That's roughly $40 (in todays money) over 30 years for every $1k invested, give or take a few months.
Carpe: pick, pluck, pluck off, gather
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Re: 30 year TIPs auction announcement October 17

Post by #Cruncher »

Carpe wrote:That's roughly $40 (in todays money) over 30 years for every $1k invested, give or take a few months.
Don't you mean $400, Carpe? That's about what I get for each $1,000 of face value assuming the 0.625% coupon is reinvested at the 1.330% yield:

Code: Select all

   Case 1      Case 2
  --------    --------
   (829.43)    (829.43)  Unadjusted Price from Auctions Results PDF file
    187.50      228.58   Accumulated Interest at Redemption
  1,000.00    1,000.00   Principal at Redemption
  1,187.50    1,228.58   Total at Redemption
  --------    --------
    358.07      399.15   Total less Unadjusted Price

Case 1: interest grows at 0% (real):     $1000 * 0.625% * 30 years                   = $187.50
Case 2: interest grows at 1.330% (real): $1000 * 0.625% * (1.0133 ^ 30 - 1) / 0.0133 = $228.58
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Re: 30 year TIPs auction announcement October 17

Post by Carpe »

#Cruncher wrote:
Carpe wrote:That's roughly $40 (in todays money) over 30 years for every $1k invested, give or take a few months.
Don't you mean $400, Carpe? That's about what I get for each $1,000 of face value assuming the 0.625% coupon is reinvested at the 1.330% yield:

Code: Select all

   Case 1      Case 2
  --------    --------
   (829.43)    (829.43)  Unadjusted Price from Auctions Results PDF file
    187.50      228.58   Accumulated Interest at Redemption
  1,000.00    1,000.00   Principal at Redemption
  1,187.50    1,228.58   Total at Redemption
  --------    --------
    358.07      399.15   Total less Unadjusted Price

Case 1: interest grows at 0% (real):     $1000 * 0.625% * 30 years                   = $187.50
Case 2: interest grows at 1.330% (real): $1000 * 0.625% * (1.0133 ^ 30 - 1) / 0.0133 = $228.58
Yes, $400.

Thanks.
Carpe: pick, pluck, pluck off, gather
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