In the Media | April 2013

US's Miller Q&A: Weak TIPS Sale Reflects Reassessed Infl Fear

MNI | Deutsche Börse Group, April 18, 2013. All Rights Reserved.

NEW YORK (MNI) - Treasury Under Secretary Mary Miller Thursday night avoided a specific direct comment on the day's relatively weak $18 billion TIPS 5-year note auction.

But she did tell MNI in an exclusive comment that "over the past week, people have been reassessing their inflation expectations."

She also hailed the cooperation between the Bank of England and the U.S. FDIC on banking regulation.

Miller was answering questions from the audience at the annual Human Minsky Conference where she had delivered a speech saying, as reported earlier, that as much as current commentary ascribes great funding advantages to those banks of a size to be considered "too big to fail," that the perception may be increasingly out of date.

The U.S. TIPS market declined sharply Thursday afternoon after the auction tailed nearly seven basis points although it drew reasonably good indirect bids. The auction size had been increased $2 billion over a similar previous auction.
Miller also parried when asked by an audience member if the U.S. regulators such as Treasury should make U.S. banks leave ISDA. "You need to step back and look at the totality of financial regulation," said Miller.

Adapting to the "clarity" of the Dodd-Frank Act about how taxpayers will be spared any future bank bailouts, credit ratings firms that had given the biggest banks a seven-notch uplift beyond their underlying creditworthiness, have now taken back as much as six notches. "One rating agency," she noted "has also recently indicated it may further reduce or eliminate its remaining ratings uplift assumptions by the end of 2013," she said.

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