68.3 US Treasury Auction Brings Surprisingly Bad News

———Part 3 Summary———
On April 23 the 5-year US Treasury Inflation Protected Security auction resulted in LOWER inflation expectations. For years now these auctions conveyed RISING market-based inflation expectations. But now? With monetary ‘printing’ and fiscal ‘stimulus’ gone wild the market says, “Put your shirt back on.”


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Twitter: https://twitter.com/JeffSnider_AIP
Twitter: https://twitter.com/EmilKalinowski
Alhambra YouTube: https://bit.ly/2Xp3roy
Emil YouTube: https://bit.ly/310yisL
Art: https://davidparkins.com/

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———Ep 68.3 Topics———

01:58 Treasury Inflation Protected Securities are not auctioned very frequently
02:35 The late-April 5YR TIPS auction had a heavy bid from foreign official institutions
04:11 The infrequency of TIPS auctions means that when one does occur it can reset perceptions
05:11 What does it mean when a TIPS auction is a “reopening”.
06:15 The Apr-2014 5-Yr TIPS auction raised inflation expectations.
08:38 The Apr-2015 5-Yr TIPS auction raised inflation expectations.
09:40 The Apr-2017 5-Yr TIPS auction raised inflation expectations.
10:35 The Apr-2018 5-Yr TIPS auction raised inflation expectations.
11:53 The Apr-2019 5-Yr TIPS auction did not raise inflation expectations (stayed the same).
12:40 The Oct-2019 5-Yr TIPS auction raised inflation expectations.
14:07 Indirect bids represented foreign bids behind the rising inflation expectations.
15:19 The Apr-2021 5-Yr TIPS auction LOWERED inflation expectations!! Wait, wut?!
17:25 The financial media did not sound the alarm about this peculiar TIPS auction – at all
18:39 Final concluding, summarizing thoughts by Jeff.

———Ep 68.3 References———

What Is It About TIPS 5s Auctions? What Was It About *This* One?: https://bit.ly/3gObbLn
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7


Jeff Snider, Head of Global Investment Research for Alhambra Investments and Emil Kalinowski, TIPSy broadcaster. Art by the nice version of Gordon Ramsey, David Parkins. Podcast intro/outro is “Pa Na Ma” by Giants’ Nest at Epidemic Sound.