Those were not bonds, but rather Treasury Inflation Protected Securities (TIPS) which are tied to CPI.
The fixed payment on five-year TIPS, known as the real yield, has been pushed below zero because the rise in the CPI is greater than the yield on regular five-year U.S. notes
Those were not bonds, but rather Treasury Inflation Protected Securities (TIPS) which are tied to CPI.
The fixed payment on five-year TIPS, known as the real yield, has been pushed below zero because the rise in the CPI is greater than the yield on regular five-year U.S. notes
http://www.bloomberg.com/news/2010-10-25/treasury-draws-nega...
Why they were negative is because they are tied to CPI and the CPI was higher than the interest on similar short term bonds.
So provided the CPI continues to rise, these TPS securities (which are tied to CPI) will end up paying more return than similar short term bonds.
In other words the market was betting the CPI would continue to rise while short term interest rates would remain low.