It's essentially impossible to perform market analysis on a TIPS auction without sending a questionnaire to all of the bidders.  Don't let anyone else tell you otherwise.  This has to do with the fact that TIPS demand can mean 2 entirely different things.  On the one hand, it suggests demand to be protected from inflation, which has a negative implication for bond markets.  On the other hand, it suggests demand for bonds in general, which has a positive implication.  

All we can really do is say "the TIPS auction just happened" and then observe a change in bond market behavior.  Right now, that change is positive.  Incidentally, all of the auction stats were right in line with recent averages, so we're not seeing a reaction to the auction details.  We could, however, simply be seeing a reaction to the fact that bond investors just moved past the need to bid on another $14 bln of "supply," thus allowing for a modest positive movement. 

10yr yields are down to the lows of the day at 1.532, which is notable because 1.540 had been acting as resistance (aka, a "floor"), at least in the short term.  MBS have done an OK job of following the move with Fannie 3.0s also at the best levels of the day.