On January 29,1997, the US Treasury auctioned a new inflation-indexed security, Treasury Inflation Protected Securities (TIPS) The auction was considered by some to be the biggest news in Treasury debt management since the introduction 20 years ago of the 30-year Treasury security. Inflation-indexed securities provide a degree of inflation protection for investors and potentially represent cost savings for the US Treasury because it will not have to pay premium for inflation uncertainty. The interest rate paid on these securities (known as the ‘‘real rate’’) provides investors with a guaranteed semiannual return above inflation.