{"id":2781,"date":"2008-09-02T18:58:07","date_gmt":"2008-09-02T22:58:07","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=2781"},"modified":"2008-09-02T18:58:07","modified_gmt":"2008-09-02T22:58:07","slug":"us-tips-5-year-issue-in-danger","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=2781","title":{"rendered":"US TIPS: 5-Year Issue in Danger"},"content":{"rendered":"<p>As <a href=\"http:\/\/www.bloomberg.com\/apps\/news?pid=20601109&#038;sid=atKnQFruecww&#038;refer=home\">reported by Bloomberg<\/a>, an <a href=\"http:\/\/www.treas.gov\/offices\/domestic-finance\/debt-management\/adv-com\/members\/\">advisory committee to the Treasury<\/a> has <a href=\"http:\/\/www.treas.gov\/press\/releases\/hp1095.htm\">recommended<\/a>:<\/p>\n<blockquote><p>The Committee generally agreed that an increase of average maturity in the TIPS program would be best accomplished by reducing or eliminating 5-year TIPS issuance. There was general agreement that given the excess cost to date and the non-transient liquidity premium of TIPS, inflation indexed secruties over the past 10 years have proven to be a less efficient funding mechanism given Treasury&#8217;s objective of the lowest cost of borrowing over time. The Committee also reiterated its previous suggestion of moderating the growth of the program and eliminating 5-year TIPS issuance.<\/p>\n<p>Director Ramanathan responded by stating that Treasury remained committed to the TIPS, but that a moderation in the growth of the program has occurred given the pace of issuance ver the past ten years relative to nominal issuance.<\/p><\/blockquote>\n<p>A detailed report is alluded to in the linked minutes, but &#8230; I can&#8217;t find it! Any help on this will be gratefully appreciated.<\/p>\n<p>The discussion, as reported in the <a href=\"http:\/\/www.treas.gov\/press\/releases\/hp1094.htm\">report<\/a> and the <a href=\"http:\/\/www.treas.gov\/press\/releases\/hp1095.htm\">minutes<\/a>, seems to indicate a conclusion that the liquidity premium paid by Treasury outweighs the inflation risk premium recieved (or, more precisely, not paid) by Treasury. The importance of the liquidity premium is <a href=\"http:\/\/www.clevelandfed.org\/research\/data\/tips\/index.cfm\">researched by the Cleveland Fed<\/a>.<\/p>\n<p>Sadly, I have not had a chance to read the <a href=\"http:\/\/www.prefblog.com\/?p=2767\">BIS Quarterly Review<\/a> article on inflation-indexed bonds with this conclusion firmly in mind.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As reported by Bloomberg, an advisory committee to the Treasury has recommended: The Committee generally agreed that an increase of average maturity in the TIPS program would be best accomplished by reducing or eliminating 5-year &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-2781","post","type-post","status-publish","format-standard","hentry","category-miscellaneous-news"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2781"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2781\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}