The U.S. sale of $9 billion in 30-year Treasury Inflation Protected Securities (TIPS) drew the weakest demand in a dozen years amid stagnant inflation and as the Federal Reserve reduces its bond purchases.

The bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.34, the lowest level since a sale in October 2001, the last offering before the U.S. suspended sales of the security for almost a decade. Auctions resumed in February 2010. The 30-year TIPS sold yesterday yielded 1.495 percent, the most since June 2011. The average forecast of seven of the Fed's 22 primary dealers in a Bloomberg News poll was a yield of 1.463 percent.

"The basis of strong buying of TIPS has to be stronger inflation before investors are enticed back into the market, and we just aren't seeing much," said Aaron Kohli, an interest-rate strategist in New York at BNP Paribas SA, which as a primary dealer is obligated to bid in U.S. debt sales. "The big takeaway from a weaker auction is that investors are willing to buy, but a greater concession is needed or real inflation pressures need to step up."

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