Thank You, Janet Yellen: New 10-Year TIPS Auctions With A Real Yield Of 0.436%

Summary

  • TIPS yields rose Wednesday after Fed Chair Yellen signaled more interest rate increases are coming.
  • Investors at today’s auction got a boost in yield, the highest in a year.
  • The 10-year inflation breakeven rate hit 2.044%, signaling that TIPS are no longer ‘cheap’ versus nominal Treasurys.

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U.S. Inflation Rose 0.3% In December; Up 2.1% Over Last 12 Months

Summary

  • News is not good for I Bond investors: Inflation is flat over first three months of rate-setting period.
  • Year-over-year ‘headline’ inflation broke through the 2.0% barrier for the first time since June 2014.
  • Core inflation rose 2.2% in 2016, above the Federal Reserve’s target of 2.0%.

Read my full analysis on SeekingAlpha.com

Also, I have updated my Tracking Inflation and I Bonds page with these new numbers.

And here are the new CPI Indexes for TIPS in February.

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Coming January 19: Treasury Will Auction A New 10-Year TIPS, One Worth Watching

Summary

  • A week away, the yield to maturity is estimated at 0.39%, not awful but also not really attractive.
  • The inflation breakeven rate of 1.99% indicates TIPS are no longer ‘cheap’ versus nominal Treasurys.
  • Looking ahead: 5 more auctions of this maturity in 2017.

This is a particularly interesting auction because it is the first new-issue TIPS since the election of Donald Trump on November 8 set off turmoil in the Treasury market.

Read my preview and analysis on SeekingAlpha.com

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I Bond Investors: Here’s Your Buying Guide For 2017

Summary

  • Advice: Do nothing for three months.
  • The current 2.76% variable rate is at risk, but the current fixed rate of 0.0% is too low.
  • It’s a waiting game: Watch the variable rate trend and hope for a higher fixed rate later in 2017.

U.S. Series I Savings Bonds are a boring, ultra-conservative investment that somehow drive many people – including a lot of very wealthy people – to scheme over buying strategies and fret over single basis-point rate swings. The key strategy is to buy them every year, up to the Treasury limit. But the question is: When?

Read my full analysis at SeekingAlpha.com

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Recapping 2016: The Year In Treasury Inflation-Protected Securities

Summary

  • TIPS yields started and ended the year at relatively high levels, but dipped at midyear.
  • TIPS outperformed the overall bond market as inflation expectations rose, increasing demand for TIPS and softening increases in yield.
  • Are today’s higher yields a head-fake, or a signal of buying opportunities to come?

Treasury Inflation Protection Securities had a promising beginning of 2016 for investors, then a serious slump in yields at midyear, and then a promising rise in yields again after the November elections.

What can we expect in 2017?

Read my full analysis at SeekingAlpha.com

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Defying The Naysayers: 5-Year TIPS Reopening Auctions With A Real Yield Of 0.12%

Summary

  • A bear market for Treasury Inflation-Protected Securities? Not based on this auction, which generated strong demand.
  • The coupon rate of 0.12% fell just below the coupon rate of 0.125%, meaning buyers had to pay a small premium for this TIPS.
  • TIPS have been out-performing the overall bond and Treasury markets over the last week. Inflation protection is still ‘in’.

TIPS have been on the move this week, with yields falling and prices rising. It’s a bit of a shock for those predicting a collapse in the Treasury market. And today’s auction was probably a bit of a disappointment for investors expecting a slightly higher yield.

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Attention Bankers: It’s Time To Raise Your Sorry CD Savings Rates

Summary

  • The Federal Reserve’s key short-term interest rate has increased 25 basis points.
  • Shorter-term Treasury yields have increased as much as 87 basis points since May.
  • But interest rates on bank CDs have barely budged. It’s time for savers to benefit from higher CD rates.

Read my full analysis – and join the discussion – on SeekingAlpha.com

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