Demand Rises for Inflation T-Notes

Yields fell at the U.S. Treasury’s auction of 9 1/2-year inflation-indexed notes Wednesday, thanks to stronger demand.

The Treasury sold $5 billion of the notes at a yield of 3.5%, down from the previous auction Jan. 10, when the securities yielded 3.522%.

Besides the yield, investors earn automatic inflation adjustments on the securities. Those adjustments are added to the principal amount of the notes and are paid at maturity.

The government received bids for the notes equal to 1.90 times the amount sold. The bid-cover ratio was 1.68 at the previous auction, indicating stronger demand--which suggests investors are more concerned about inflation’s trend.