How do you know when the Treasury Department will hold an auction and for what issues the auction will be? Right now the Treasury Department sells TIPS by auction only once a month. Their schedule looks like this:
N = a new issue that hasn’t been on the market before
R = a reopening of a bond sold in a previous auction
A reopening means selling additional quantities of an existing bond at a different yield. For example, this schedule table shows that in the month of March, there is an auction for a 10-year TIPS. It is a reopening of the same bond first sold in January. It’s really a 9-year 10-month bond to be precise.
For the exact auction dates, 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 blue so they are easy to spot.
There are three dates in the schedule.
1. Announcement Date. The Announcement Date is when the Treasury Department publishes an official announcement. The announcement will contain more details about the bond being auctioned. You can’t place an order until the Announcement Date.
2. Auction Date. The Auction Date is the date when the Treasury Department actually holds 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 some time for transmitting your order to the Treasury. To play it safe, it’s better to place the order at least one business day before the Auction Date.
3. Settlement Date. The Settlement Date is the date when you actually pay and receive the bonds. You must have enough cash ready on this date.
The next step is reading the official announcement.