This is the first post in a series on buying new-issue TIPS in an auction. Other posts in the series include:
- TIPS Auction Step By Step: Read the Announcement
- TIPS Auction Step By Step: Place Order
- TIPS Auction Step By Step: Read the Results
Tentative Auction Schedule
How do you know when they will hold an auction for what? The Treasury Department publishes a tentative auction schedule a few months in advance. Although it is said to be tentative, the schedule is pretty much set once it’s published. The schedule includes auctions for Treasury bills, regular (“nominal”) Treasury notes and bonds, and TIPS. The TIPS auctions are shaded in light blue and marked with a letter T.
There are three dates in the schedule.
The Announcement Date is when they publish a formal announcement. The announcement will contain more detailed information about the bond being auctioned. You can’t place an order until the Announcement Date.
The Auction Date is the date when they actually hold the auction. The cutoff time is specified in the announcement, usually around 12:00 p.m. Eastern Time. Your order must be received on or before the auction cutoff time on the Auction Date.
If you place order through a brokerage account, the brokerage firm may impose its own cutoff time before the official cutoff time to allow itself time for transmitting your order to the Treasury. For example the current cutoff time at Vanguard Brokerage Service is 9:30 a.m. Eastern Time for online orders or 10:00 a.m. Eastern Time for phone orders. To play it safe, you should place the order by the night before the Auction Date.
The Settlement Date is the date when you actually pay and receive the bonds. You must have enough cash ready on this date.
Next step: read the announcement.
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