TreasuryDirect tax forms: How to find the 1099s, decipher them

Posted on January 28, 2026 by Tipswatch

By David Enna, Tipswatch.com

One of the great “joys” of having an account at TreasuryDirect is hunting for information on federal taxes you might owe on last year’s transactions. It’s not easy, and even when you find the information, it is surprisingly cryptic.

You need to find 1099 forms for each account you have at TreasuryDirect. You will get nothing in the mail, but you will get an email that is easy to miss. I got an alert from reader Doug on January 21 that the 1099s had been posted (seems earlier than normal), and three days later got the very important email:

TreasuryDirect’s 2-minute video (which was produced several years ago) is actually helpful, and it plays on YouTube, so you can watch it right here:

As the video notes, if you are part of a couple with separate accounts, or if you have linked accounts from converting paper I Bonds, or child accounts, or separate trust or entity accounts, you will need to go to the linked accounts and get separate 1099s. In the case of a spouse, you will need to log out and re-login to that separate account to find the second 1099. Here is what TreasuryDirect says:

It is important to check ALL of your accounts, as a separate Form 1099 will be created for each one. If you have established Custom, Minor-Linked, or Conversion-Linked accounts, you must access each account to print the Form 1099 for that account.

However, if you use your TreasuryDirect account simply to buy savings bonds (I Bonds or EE Bonds) and didn’t redeem any or have any mature in 2025, there will be no taxable transactions and you won’t have 1099s. You will see this on TreasuryDirect’s ManageDirect page:

TreasuryDirect is NOT going to mail you these forms. You need to hunt them down.

Important: Once you are inside the account section of TreasuryDirect, never click on your browser’s back button. If you do, you will be booted out of TreasuryDirect and you will have to log in again. To navigate, either click on the top row of tabs or click “return” at the bottom of most pages.

Here is the basic step-by-step process for finding each set of 1099s:

  1. Log into your TreasuryDirect account on this page. Click “Next.”
  2. Enter your account number and click “Submit.”
  3. After you enter the account number, you will get a message that a verification code has been sent to the associated email address. Open the email, copy the code and paste it in the box. Click “Submit.”
  4. Enter your password and click “Submit.”
  5. Now you are on your MyAccount page on TreasuryDirect. From here you can click on your Investor InBox in the upper navigation to see further instructions. The message will be titled “Tax Statement Notification.”

Important tax information for the recently concluded tax year is now available. The Form 1099 may be accessed through the ManageDirect tab in your TreasuryDirect account. A Form 1099 will NOT be mailed to you.

  1. Next, click on the “ManageDirect” link in the upper navigation. Under the heading, Manage My Taxes, select the link for the 2025 tax year. Then click the link: “View your 1099 for tax year 2025.” (Make sure to select 2025, not 2026.)
  2. At this point, you may get a huge listing of all of your interest payments, savings bond redemptions, potential capital gains and original issue discount accruals for Treasury Inflation-Protected Securities.
  3. TreasuryDirect does not offer an easily printable .pdf version of this form. To print it, click anywhere on the browser page and hit CONTROL P on a PC or COMMAND P on a Mac. This should open up a dialog to print the pages. (Mine was 10 pages long.)
  4. Print the 1099. (Your computer may also give you the option to “print to .pdf” which will allow you to save the document before printing.)
  5. Don’t have a printer? You can copy the entire text of the 1099 and paste it into a text or Word document. Save that file for reference when you fill out your tax return.
  6. At the bottom of the page, click on “Return.” Repeat the process for any additional spousal or linked accounts.

Just to make things more aggravating: Once you open your 1099 page, there will be no top tabs and you will need to scroll all the way to the bottom (10 pages!) to get to the “Return” button. Do not click on the back arrow or you will get logged out of TreasuryDirect.

Examine the 1099

There is a lot to see here, and you don’t want to miss anything that needs reporting to the IRS. On a 1099 from any brokerage or bank, everything is nicely organized and summed up, with clear references to the proper boxes on your tax filing. Not so with TreasuryDirect. In fact, this 1099 is actually a collection of 1099 forms, each with special purposes.

Form 1099-INT Interest Income

If you invested in any T-bills, Treasury notes or bonds, TIPS or redeemed savings bonds in 2025, you are going to see all interest-paying transactions listed here. In 2025 I was rolling over staggered T-bills at TreasuryDirect, plus had a collection of TIPS, plus redeemed a couple 0.0% I Bonds, so my list was enormous. Example:

At the bottom of this long list, a long way down, is the total. Scroll all the way back up to the top to see that this total is Interest On U.S. Savings Bonds And Treas. Obligations and it goes in Ref. Box 3 on the federal tax form when you are filling out the section for 1099-INT. Here is the definition of Box 3:

Shows interest on U.S. Savings Bonds, Treasury Bills, Treasury Notes, Treasury Bonds and Treasury Inflation-Protected Securities (TIPS). … This interest is exempt from state and local income taxes.

You want to make sure the interest gets recognized as coming from U.S. Treasurys, because it will be free of state income taxes.

If you had any proceeds withheld for tax purposes (highly unlikely) those totals will be listed in column 5 of this section.

Form 1099-B Proceeds from Broker and Barter Exchange Transactions

There are several sections to form 1099-B and I generally have one or two transactions listed here. This is a very confusing section of the form and offers many opportunities for taxpayers to scream and pull out their hair. I believe the purpose is to show the Accrued Market Discount on longer-term investments that matured in 2025. This is my sole transaction listed for 2025:

Reminder: THIS IS CONFUSING. I am leaving the dollar amount in this one because it is important in determining how to translate this to your tax return. For some reason, even though I bought this TIPS at TreasuryDirect in 2015, TreasuryDirect doesn’t seem to know how much I paid for it. So it is simply reporting gross proceeds.

Some taxpayers might assume they need to report that $6,770.10 as taxable income, which would be entirely wrong and costly. My original investment in this TIPS was $5,000 par value. The extra $1,770.10 I received at maturity was from inflation accruals, which have already been taxed every year for the last 10 years.

So the only taxable event here is: Did I buy this TIPS at a discount or premium to par value? My original cost was $4,957.48 (thankfully I have that recorded). Add $1.770.10 to that amount and you get a cost basis pf $6,727.58.

End result: I owe capital gain taxes on $42.52. (Plus an extra 15 minutes in TurboTax trying to figure out how to enter it correctly.)

Form 1099-OID Original Issue Discount

This is a very important section for investors who hold TIPS at TreasuryDirect. The 1099-OID lists annual inflation accruals for every TIPS held in the TreasuryDirect account in 2025. These inflation accruals are federally taxable in the year they were earned, even though they were not paid out but just added to principal.

Long-time investors in TIPS are familiar with the 1099-OID, but new investors at TreasuryDirect need to pay heed to this section and report it on their federal tax return.

At the bottom of the list will be the total for all your TIPS holdings. TreasuryDirect notes:

Report this amount as interest income on your federal income tax return. … This OID is exempt from state and local income taxes.

Thoughts

I am no tax expert, so nothing you just read should be considered tax advice. Still, getting these 1099s from TreasuryDirect is EXTREMELY IMPORTANT. And make sure you do this for every account where you had taxable activity (such as maturing T-bills or redemptions of I Bonds).

You are going to get one email with a fairly cryptic message. That’s it. Nothing in the mail. Nothing you can download to Quicken. No .pdf. No easy-to-read tax summary like you receive from your broker. It’s up to you to go to TreasuryDirect, find the 1099s, print them, decipher them and report them on your tax return for 2025.

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in I Bond, Investing in TIPS, Taxes, TreasuryDirect | Tagged , , | 22 Comments

I Bond buying guide for 2026: Wait it out

Posted on January 25, 2026 by Tipswatch
AI-generated image for “investor with ticking clock” Perchance.org

By David Enna, Tipswatch.com

Last January, Series I Savings Bonds offered a fixed rate of 1.20% and had a lot of appeal. A year later, that fixed rate has fallen to 0.90%. Are I Bonds still relevant for investors seeking safety and protection against unexpected inflation?

Yes, I’d say they remain relevant and still attractive at a time when short-term interest rates are declining. The current composite rate is 4.03%, up from 3.11% last January. That is better than the 13-week Treasury yield of about 3.70%.

This year, however, the I Bond purchase equation is a little complicated. Instead of loading up in January, I am recommending holding off until later in the year. But first …

The basics

  • The fixed rate of an I Bond will never change. Purchases through April 30, 2026, will have a fixed rate of 0.90%, which means the return will exceed official U.S. inflation by 0.9% until the I Bond is redeemed or matures in 30 years.
  • The inflation-adjusted rate (often called the I Bond’s variable rate) changes each six months to reflect the running rate of inflation. That rate is currently 3.12%, annualized, for six months. It will adjust again on May 1, 2026, rolling into effect for all I Bonds, no matter when they were purchased.
  • The current composite rate is 4.03% annualized for six months for purchases through April 2026.

I Bonds are an extremely safe and conservative investment. Interest accrues monthly and principal can never decline, even in times of deflation. Investments are limited to $10,000 per person per calendar year for electronic I Bonds held at TreasuryDirect. There is also a “gift box” strategy some investors use to stack purchases for future years.

I Bonds are a unique investment with many positives. For example, earnings are free of state income taxes and federal taxes can be deferred until the I Bond is redeemed or matures. Also, I Bonds are a simple investment to buy and track, much simpler than a TIPS with a constantly changing market value and inflation accruals that update daily.

Looking ahead

An investor who purchases an I Bond through April 2026 will earn the composite rate of 4.03% for a full six months, no matter the month of purchase. After that, the fixed rate will remain at 0.90% but the composite rate will change. So what’s ahead?

Future fixed rate. Although the U.S. Treasury does not reveal its formula for determining the I Bond’s fixed rate, we know Treasury tracks trends in real yields and adjusts accordingly. This forecasting formula has worked for the last decade: Take the average real yield of the 5-year TIPS over the preceding six months and apply a ratio of 0.65.

The next rate reset will come May 1, so we are interested in real yields from November 2025 to April 2026. So far, we are less than three months into that period, but here are the current results:

At this point, the projection points to the I Bond fixed rate remaining at 0.90% at the May reset. But a lot can change in the next three months, especially if the Federal Reserve moves to cut short-term interest rates in the meantime.

Variable rate. We are just getting out of a period of chaotic statistical information from the U.S. government, caused by last year’s government shutdown. No inflation data were collected in October and November’s numbers were suspect, especially in the way housing data were reported. The result was a very sharp drop in November’s non-seasonally adjusted inflation, down 0.46% for the month.

The I Bond’s next variable rate will be set based on non-seasonally adjusted inflation for the months of October 2025 through March 2026. Three months into that period, we’ve had deflation of 0.23%, which would translate to a variable rate of -0.46% at this point.

This negative number is going to turn around in the months of January to March and will very likely end up positive. Non-seasonally adjusted inflation runs higher than headline inflation at the beginning of the year. But how much of an increase can we expect? The last three years give us an idea:

  • In December 2024, 3-month inflation was only 0.11%. By March that increased to 1.43%, setting the variable rate 2.86%.
  • In December 2023, 3-month inflation was -0.34%. By March it increased to 1.48%, setting the variable rate at 2.96%.
  • In December 2022, 3-month inflation was 0.0%. By March it increased to 1.69%, setting the variable rate at 3.38%.

Conservatively, I’d say expect six-month inflation of at least 1.00%, which would result in a variable rate of 2.00%.

Composite rate. If the fixed rate holds at 0.90% and the variable rate drops to 2.00%, you’d get a new composite rate of 2.91%, well below the current rate of 4.03%. Again, I emphasize that this is a conservative estimate.

In this conservative scenario, an I Bond purchase any time through April 2026 will earn 4.03% for six months and then 2.91% for six months, for a combined annual return of about 3.47%.

When to act

There is no reason to jump aboard an I Bond investment in January 2026. You can get that 0.90% fixed rate and the six-month composite of 4.03% anytime through April 2026. So just be patient.

First buying window. This will come after the March inflation report is issued on April 10, 2026. That report will lock in the I Bond’s new variable rate, and we will have a much better idea of the potential fixed-rate reset coming May 1. You will have more than two weeks to decide: Buy in April, buy in May or continue waiting?

If the fixed rate looks likely to fall, I would be a buyer in April, no matter what the six-month variable rate will be. The fixed rate is permanent and is much more important for anyone planning to hold for five years or longer.

Second buying window. The second decision period will come after the September inflation report is issued October 14, 2026. Again, at that point you will know with certainty the next variable rate — to be reset November 1 — and have a good idea of the next fixed rate.

Most likely, I will be buying in April. Still, waiting is the best action right now.

Short-term investment?

The current composite rate of 4.03% certainly looks attractive when you compare it to the nominal yields of a 4-week (3.75%) or 1-year (3.53%) T-bill. But remember than you have to hold an I Bond for one year and if you redeem at that point you lose the latest three months of interest.

The answer is no. My conservative scenario had a one-year I Bond return of 3.47%, but that would drop to about 2.74% if you subtract the last three months of interest. If you are looking for a one-year investment, just buy the 1-year T-bill at 3.53%.

I Bond versus TIPS

A five-year TIPS currently has a real yield of about 1.38%, a lofty 48 basis points higher than the I Bond. These are comparable investments, since the I Bond can be redeemed without penalty after five years. For pure yield, the TIPS is the better investment. The I Bond has advantages of tax-deferred interest, flexible maturity and rock-solid deflation protection.

I invest in both, but use TIPS for pushing forward specific inflation-protected spending levels into the future. I use I Bonds as a secondary emergency cash reserve, constantly protected against inflation.

The rollover strategy

If you are holding I Bonds with 0.0% fixed rates, you are currently earning a composite rate of 3.12%, but that could fall to as low as 2.0% (or lower) later this year. You could redeem some of those to raise cash to buy I Bonds with a 0.9% fixed rate.

I generally encourage people to continue holding I Bonds “until you need the cash.” It’s great to have these savings bonds growing tax-deferred with zero risk. But this strategy of rolling over 0.0% I Bonds for a 0.9% fixed rate makes sense.

You will owe federal income taxes on the interest earned, and if your withdrawal is more than $10,000 (because of earned interest) you’ll only be able to buy $10,000 in new I Bonds in 2026. And if you held the I Bond less than 5 years, you will get hit with the three-month interest penalty.

The rollover strategy especially makes sense for people who are retired and have no way to raise cash for an I Bond purchase without selling an asset or withdrawing IRA money, both creating tax hits.

Reminder: When you redeem an I Bond, you earn zero interest for the month of that transaction. So the best idea is to redeem early in the month, like January 2 or April 2. Then, purchase I Bonds late in the month, because they will earn that full month of interest. For short-term investors, this can cut the holding period to very close to 11 months.

Thoughts

Despite the decent fixed rate of 0.90%, I suspect there won’t be rabid interest in I Bonds this year. But that could change if short- and longer-term Treasury rates begin falling. That 0.90% will be there through April, just waiting for your decision.

Most likely, I will be investing in I Bonds in 2026, possibly in April and probably rolling over some lower-fixed-rate I Bonds to raise the cash.

What do you think? Will you be investing in I Bonds in 2026? Or have you set plans for other (preferably safe) investments? Post your thoughts in the comments section.

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, I Bond, Investing in TIPS, Savings Bond, Treasury Bills, TreasuryDirect | Tagged , , | 54 Comments

In a volatile week, auction of new 10-year TIPS gets a real yield of 1.940%, a nice result for investors

Posted on January 22, 2026 by Tipswatch

By David Enna, Tipswatch.com

All week, I have been calling today’s auction of $21 billion in a new 10-year Treasury Inflation-Protected Security — CUSIP 91282CPU9 — the hardest to forecast in a decade.

At times, the most recent 10-year TIPS on the secondary market was trading with a real yield as low as 1.82%, but the Treasury was estimating a real yield of 1.97% on Tuesday. That’s a gigantic spread.

The reason for this week’s volatility, early on, was clearly President Trump’s implicit threats against Greenland and potential new tariffs on much of Europe. But on Wednesday that all turned around with a “framework” of a deal on Greenland and dismissal of the tariff threat.

A key auction question remained: How much trust will investors — especially foreign investors — have in U.S. Treasurys amid this turmoil?

Today’s auction results could have been an indication of slipping trust. The when-issued forecast for the auction, released just before the close, was for a real yield 0f 1.92%. The end-result of 1.940% is a pretty big miss, indicating weak demand. The bid-to-cover ratio was 2.38, not bad.

The auction set the coupon rate for this TIPS at 1.875%.

Definition: The “real yield to maturity” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 1.940% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 1.94% for 10 years..

This is the first TIPS ever issued that will mature in 2036, so it was probably in high demand for small-scale investors building ladders of TIPS into future years. For those investors, a real yield of 1.940% was a pleasant surprise. Here is the trend in the 10-year real yield over the last year:

Click on image for larger version.

Pricing

Because the coupon rate of 1.875% was set below the real yield of 1.940%, investors got a discounted unadjusted price of 99.413260. In addition, this TIPS will carry an inflation index of 0.99779 on the settlement date of January 30, caused by deflation of -0.46% reported for November 2025. With that information, we can calculate the cost of a $10,000 par value investment in this TIPS:

  • Par value: $10,000.
  • Principal purchased on settlement date: $10,000 x 0.99779 = $9,977.90.
  • Cost of investment: $9,977.90 x 0.99413260 = $9,919.36
  • + accrued interest of $7.75.

In summary, an investor purchasing $10,000 par value at today’s auction is paying $9,919.36 for $9,977.90 of principal on the settlement date. From then on, the investor earns accruals matching future inflation for 10 years, plus an annual coupon rate of 1.875% paid on inflation-adjusted principal.

Inflation breakeven rate

At the auction’s close, the 10-year Treasury note was trading with a nominal yield of 4.25%, which creates an inflation-breakeven rate of 2.31%, more or less in line with recent trends. This means the TIPS will out-perform the nominal Treasury if inflation averages more than 2.31% over the next 10 years.

Here is the trend in the 10-year inflation breakeven rate over the last year:

Click on image for larger version.

Thoughts

For months, I have been signaling I was going to be a buyer at today’s auction, as long as real yields held up. And, yes, I was a buyer. It was a strange and uncertain week, maybe in line with of our “new normal.” Both the stock and bond markets have rebounded nicely from the early-week turmoil.

This will most likely be my only TIPS purchase of the year. But investors interested in building TIPS ladders should continue watching yields for TIPS maturing in 2040 and beyond, all with real yields of 2.0% and higher, sometimes much higher.

Will real yields surge higher because of a “sell-America” trade or begin falling as the Federal Reserve eventually resumes rate cuts later this year? I have no idea, honestly. But buying a TIPS with an above-inflation yield of 1.94% — and holding to maturity — is a safe-enough bet for me.

Coming up: On Sunday, I will post my I Bond buying guide for 2026. Watch for that.

Meanwhile, here is a summary of recent results for 9- to 10-year TIPS auctions:

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Federal Reserve, Inflation, Investing in TIPS, TreasuryDirect | Tagged , , | 20 Comments

Is this week’s new 10-year TIPS worth targeting?

Posted on January 18, 2026 by Tipswatch

For me, definitely. But it’s a personal decision.

AI image for “investor targets far-off $ target.” His aim looks bad. Google Gemini.

By David Enna, Tipswatch.com

Something unique is coming this week: The first-ever Treasury Inflation-Protected Security to mature in the year 2036. For that reason, and the fact that real yields remain attractive, I will be a buyer.

This is CUSIP 91282CPU9, a new 10-year TIPS that will auction Thursday. The coupon rate and real yield to maturity will be determined by the auction results. I have targeted this TIPS for a long time as the 2036 addition to my ladder of TIPS investments that stretches to 2043.

No TIPS were ever issued with maturities in years 2036 to 2039 for two reasons: 1) the Treasury stopped issuing 20-year TIPS in November 2009 and 2) the 30-year TIPS auctions were halted from October 2001 to February 2010. That left investors with gap years.

As a compulsive ladder builder, I want to fill those 2036 to 2039 years and I have set up my traditional IRA to allow purchases in January 2026 to 2029 — as long as real yields remain attractive.

This January auction size, by the way, is $21 billion, up from $20 billion for a matching auction in January 2025, but holding steady with the size of the new TIPS issued in July 2025. This marks a break in the Treasury’s recent practice of raising the size of its January TIPS auction.

Real yields

At this point, the 10-year real yield is about 1.91%, according to the Treasury’s yield curve estimates. However, the most recent 10-year TIPS trading on the secondary market closed Friday at 1.88%, so we have a bit of fuzziness.

The Treasury market was shaken last week with news that the Justice Department served Federal Reserve Chairman Jerome Powell with subpoenas in an apparent criminal probe. Powell responded with a strong statement criticizing the action as threatening Fed independence.

My initial reaction was that this kind of controversy should cause inflation expectations to rise, since an independent Fed has a key role in controlling inflation. While it might not seem logical, when inflation expectations rise, the real yield of a TIPS is likely to fall, at least compared to a nominal Treasury of the same term.

And that is what happened in the last week:

The Treasury’s estimate of the real yield of a 10-year TIPS rose only 1 basis point over the last week, while the nominal yield of a 10-year Treasury note rose 6 basis points. This isn’t a huge deal, but does indicate that real yields could continue shifting this week. (The bond market will be closed Monday for Martin Luther King Jr. Day.)

So far, I’d say the market isn’t pricing in a threat to Fed independence. But investors interested in this auction should watch real yield trends through the week.

Definition: The “real yield to maturity” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 1.91% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 1.91% for 10 years.

Is an above-inflation yield around 1.90% attractive? Yes, historically. Of course, we can’t predict where real yields will be heading into the future. They could be much higher if U.S. deficits continue to soar and the world loses trust in the U.S. dollar. Here is the trend in the 10-year real yield over the last 16 years:

Click on image for larger version.

Update: In the wake of turmoil over Greenland and the threat of additional tariffs on European trading partners, the Treasury’s estimate of the 10-year real yield surged to 1.97% at Tuesday’s close. See this.

Update No. 2: After the U.S. reached a potential deal over Greenland late Wednesday, real yields fell sharply. The Treasury is showing 1.92% as the prediction, but the secondary market closed at 1.86%. Just another “normal” day.

Pricing

Since this is a new TIPS, its coupon rate will be set to the one-eighths mark below the auctioned real yield. (For example, a real yield of 1.90% would result in a coupon rate of 1.875%.)

For that reason, the unadjusted auction price will be slightly below par value and investors will get the TIPS at a discount. Plus, this TIPS will carry an inflation index of 0.99779 on the settlement date of January 30. That guarantees the investor will get a discounted price, but also get less than par value of principal as of January 30.

For example, a $10,000 par value investment will be priced slightly below $10,000, but the investor will be getting only $9,977.90 of principal on the settlement date. My reaction: No big deal, but no one should be surprised.

If you find all this confusing, read this: Q&A on TIPS

Inflation breakeven rate

As I noted above, the Treasury’s estimate of the nominal yield of a 10-year Treasury note closed Friday at 4.24%. If you assume this new TIPS will get a real yield of 1.91%, its inflation-breakeven rate would be 2.33%, as things stand today. That is more or less in line with recent auctions.

Historically, an inflation-breakeven rate of 2.33% is high, and it indicates that the nominal Treasury at 4.24% may also be a fair investment. I favor the TIPS because it provides protection against future unexpected inflation. Also, consider that inflation over the last 10 years has averaged 3.2%, through December 2025.

Here is the trend in the 10-year inflation-breakeven rate over the last 16 years, showing remarkable stability since late 2021 in the 2.2% to 2.4% range:

Click on image for larger version.

Auction thoughts

It’s impossible to predict demand for inflation-protected investments at a time when inflation reporting is being questioned and the independence of the Federal Reserve may be at risk. My view is that TIPS should get a bit of a “risk premium,” meaning slightly higher real yields. So far, that’s not happening.

I will be investing in this new TIPS unless real yields fall off in the next week. I could purchase CUSIP 91282CPU9 later in the year, easily, and possibly get a better yield at some point. Again, no big deal for my overall investment strategy. A real yield of around 1.90%, or even a little less, will be fine.

If you want to track this potential investment, you can use the Treasury’s Yield Curve estimates, which are posted at the market close each day. This is an estimate of the yield of a full-term TIPS at par value. The estimate will be close, but not perfect, and things can change on the day of the auction.

You can also monitor Bloomberg’s Treasury Yields page to see real-time updates of secondary market trading in the most recent 10-year TIPS. Consider this a rough guide; the auction result often varies.

This TIPS auction closes Thursday at 1 p.m. EST. Non-competitive bids at TreasuryDirect must be placed by noon Thursday. If you are putting an order in through a brokerage, make sure to place your order Wednesday or very early Thursday, because brokers cut off auction orders before the noon deadline.

I will be posting the auction results soon after the close on Thursday. Here is a history of auction results for this term over the last 5 years:

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Note: Comments on this article have been turned off because the direction has turned entirely political.

Posted in Federal Reserve, Inflation, Investing in TIPS, TreasuryDirect | Tagged , , | 36 Comments

U.S. inflation held steady in December; annual rate closes at 2.7%

Posted on January 13, 2026 by Tipswatch

Core inflation held at 2.6%, a 5-year low for a completed year.

By David Enna, Tipswatch.com

FYI, comments have now been closed on this article. Discussion was going strictly political.

U.S. inflation rose 0.3% on a seasonally adjusted basis in December, the Bureau of Labor Statistics reported today, with annual inflation holding steady at 2.7%, same as reported for November.

The annual rate ended up higher than expectations, but that was balanced off by a lower-than-expectations increase for core inflation, which removes food and energy. Core inflation increased 0.2% for the month and held steady at 2.6% for the year. So this looks like a fairly mild inflation report.

The December report closes the books on 2025 with an annual rate of 2.7%, down from 2.9% in 2024. That’s progress, but overall inflation remains too high.

The BLS noted that shelter costs increased 0.4% for the month and are up 3.2% for the year. Shelter costs will continue to be an “iffy” indicator because the BLS collected no survey data in October, which may slightly suppress inflation numbers for several months. Also in the report:

  • Food at home prices rose an alarming 0.7% in December and are now up 2.4% for the year. The December number reverses a several-month trend of mild food-price increases.
  • Five of the six major grocery store food group indexes increased in December. Costs of fruits and vegetables rose 0.5%; bakery products, 0.6%; dairy products, 0.9%. However, prices for meat, poultry and fish declined 0.2% in December and egg prices fell 8.2%.
  • Gasoline prices, which fell 0.5% in December, helped lower all-items inflation. Gas prices fell 3.4% over the year.
  • Electricity prices also fell 0.1%, but are up 6.7% for the year.
  • Piped gas service prices rose 4.4% for the month are are now up 10.8% for the year.
  • Costs of new vehicles were flat for the month and up only 0.3% for the year.
  • Costs of used cars and trucks fell 1.1% for the month and are up 1.6% for the year.

Here is the trend for all-items and core inflation throughout 2025, a wild ride that includes a gap for missing data in October and let’s say “questionable” data for November. The December data offer a tiny bit of clarity:

What this means for TIPS and I Bonds

Investors in Treasury Inflation-Protected Securities and Series I Savings Bonds are also interested in non-seasonally adjusted inflation, which is used to adjust principal balances on TIPS and set future interest rates for I Bonds. For December, the BLS set the inflation index at 324.054, down 0.02% from the November number.

For TIPS. The December inflation index means that principal balances for all TIPS will decline 0.02% in February, after falling 0.46% in January. However, for the year ending in February, TIPS balances will have increased 2.68.%. Here are the new February Inflation Indexes for all TIPS.

For I Bonds. The December report is the third of a six-month string that will determine the I Bond’s new variable rate, to be reset May 1. Inflation in the months of October to December has declined 0.23%, which at this point would result in a variable rate of -0.46%. However, this trend will likely reverse (possibly strongly) in January to March. So it’s too early to focus on the likely variable rate.

View historical information on my Inflation and I Bonds page

Non-seasonally adjusted deflation is common in the months of November and December, when holiday discounting kicks in. That is why the CPI is seasonally adjusted. Over the year, these variances balance out.

Click on image for larger version.

What this means for future interest rates

Beyond any other “brewing crisis” factors, I’d say this report does not support a cut in interest rates by the Federal Reserve in January. Inflation retreated slightly in 2025 but remains well above the Fed’s goals. Add to that threats of criminal indictments and Jerome Powell’s strong response, and you get some sort of gridlock. The current Fed is not going to bend to pressure.

The positive from the report is that core inflation came in slightly below expectations, and the annual rate of 2.6% marked a 5-year low for a completed year. But questions about shelter data remain, so the Fed may put off further cuts. Here is the reaction of Jeff Schulze, head of economic and market strategy at ClearBridge Investments, reported by Bloomberg:

“While investors will cheer this release as further evidence of disinflationary progress, the Fed will remain in ‘wait and see’ mode given the uncertainty until more distance came be put between the data and the shutdown. This release is positive for risk assets and increases the odds that the Fed will provide additional monetary policy support in 2026.”

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Federal Reserve, I Bond, Inflation, Investing in TIPS | Tagged , , | 48 Comments