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May 18, 2017 By Peter Boockvar

Demand for inflation protection literally off the charts

United States

The 10 yr TIPS auction, something that I rarely write about, went extremely well. The yield was 2 bps below when issued, the bid to cover of 2.56 was well above the average since last year of 2.35, and non dealer bidders took almost 90% of the auction, the most ever. In response the 10 yr inflation breakeven saw a sharp reversal higher. It was 1.78% just prior and is now up by 5 bps from that to 1.83%. It’s just about gotten back yesterday’s drop.
Bottom line, whatever you think about current inflation trends, the demand for inflation protection over the next 10 yrs in this auction was almost off the charts (literally). I guess with conventional yields having fallen all the way down to 2.22%, one might as well get inflation protection if you are going to buy Treasury paper here.

Filed Under: Latest Data

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About Peter

Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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