Dollars and Jens
Friday, July 09, 2004
Nobody filed for unemployment last week. Well, almost nobody; initial claims came in at 310,000, which is what I refer to as a "kick-the-machine" number, because that's what I would do if I got that measurement in a physics lab. Which is only one reason I'm not an experimental physicist. Anyway, bonds rose this morning in spite of the number; I understand that the usually-volatile initial claims number tends to be unusually volatile in the summer, in surprising part because car manufacturers are retooling for the new model year.
The treasury had a nondescript 10 year TIPS auction early this afternoon. I have recently read that the treasury recently announced that it would issue 5 year and 20 year TIPS; I remember when they suspended the 30 year, but I thought they had been auctioning 5 year TIPS all along. When did that stop? Its starting up again would presumably hurt I-bond investors, as it creates a more liquid market for TIPS maturing in 5 years, increasing their appeal and lowering their yield. It's this yield on which I-bond rates are based; until a week or two ago, the I-bond was headed to yield more if purchased in November than if purchased now, but intermediate- to long-term interest rates in general have weakened recently.
Incidentally, much as I keep writing about inflation being some time off, I do have a substantial amount of money in I-bonds.