* Record indirect bidder purchase at 10-year TIPS auction
* Ten-year TIPS breakeven rate hits lowest since Trump win
* Higher crude futures on hopes for output curb helps TIPS
(Updates market action, adds quote)
By Richard Leong
NEW YORK, May 18 The U.S. bond market's gauges
on inflation expectations rebounded on Thursday from their
lowest levels since November on sizzling investor demand at an
$11 billion auction of 10-year Treasury Inflation Protected
Oil futures, which rose on hopes the major producers would
agree to extend their current output cuts next week, also
buttressed the $1.24 trillion bond sector.
Earlier Thursday, TIPS breakeven rates, or the yield
differences between TIPS and regular Treasuries, year TIPS and
regular 10-year Treasury notes, had been on track to fall for a
fifth straight session before the auction.
Traders had pared their bullish TIPS positions on concerns
that domestic inflation would take longer than previously
thought to reach the U.S. Federal Reserve's 2 percent goal in
the aftermath of a slower year-over-year rise in the
government's Consumer Price Index in April.
"I hope today's auction represents a turning point. We are
seeing a return to the reflation trade reasserting itself," said
Com Crocker, senior analyst at New Century Advisors LLC in New
Indirect bidders, including fund managers and overseas
central banks, bought a record high share at the latest 10-year
TIPS auction on Thursday.
In addition to signs of renewed investor appetite for TIPS,
higher oil prices revived TIPS' appeal as an inflation hedge,
The 10-year TIPS inflation breakeven rate hit 1.77 percent
earlier Thursday. That was the lowest since Nov. 9, the day
after the election of U.S. Presidential Donald Trump.
The 10-year breakeven rate was last 1.83 percent, up 2 basis
points on the day, Tradeweb and Reuters data showed.
The five-year TIPS breakeven rate was up 2 basis points at
1.73 percent late Thursday after hitting 1.69 percent, the
lowest since Nov. 29.
U.S. oil futures settled up 28 cents, or 0.6
percent, at $49.35 a barrel on expectations that key producing
countries would stick to production cuts to reduce a global
(Reporting by Richard Leong Editing by W Simon and Richard