Treasury Sells Bonds With a Negative Yield

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http://www.nytimes.com/2010/10/26/business/26markets.html?_r=1&partner=rss&emc=rss

Inflation-protected securities sold at negative yields for the first time ever on Monday as traders anticipate that the Federal Reserve will start a new round of asset purchases.

 

Analysts said that asset purchases by the Fed would lead to a higher inflation rate and a positive return on the bonds.

 

The $10 billion auction of the five-year bonds sold at a negative yield of 0.550 percent, according to the Treasury Department. The results of the auction of the securities, known as TIPS, came as indexes on Wall Street edged higher, buoyed by recent strong corporate earnings and a rise in housing sales. The previous lowest yield for the TIPS was in the auction on April 26, when the yield was 0.550 percent.