By the time you are reading this, I will probably be sipping a dry rosé wine somewhere in southern France, where I will be traveling for two weeks. We will be starting in Marseille and eventually ending in Lyon.
I should have internet access through most of the trip and I’ll attempt (sort of) to keep up with financial news and reading & answering your comments. No promises. Expect delays. My article updates will be spotty and ill-timed.
This won’t be a particularly newsy two weeks, but of course crazy things do happen every few days in our current United States.
What’s ahead
All of France is following Central European Summer Time, which is six hours ahead of Eastern Daylight Time.
Wednesday, June 17. The Federal Reserve’s Open Market Committee will complete its first meeting under new Chairman Kevin Warsh. Any rate decision will be announced at 2 p.m. EDT (8 p.m. in southern France), and Warsh has committed to conduct a very interesting news conference a half hour later. The Fed is also expected to release a summary of economic projections.
I don’t write about Fed meetings, since you can get that content from 2,000 other sources. But if I can, I will watch the Warsh news conference out of pure curiosity. And it will be interesting to see if Jerome Powell, still a member of the Fed Board of Governors, pops up anywhere. (Prediction: He won’t.) These are questions I raised in my Sunday article:
Will the FOMC statement drop its “easing bias,” signaling the possibility of future rate increases?
Will Warsh suggest he is open to future rate increases, if needed?
Will the governors go along with Warsh’s plans to reduce the Fed’s balance sheet, which could cause long-term rates to rise?
What will the dot points predict for future interest rates, inflation and economic growth?
How much dissent will we see from voting members of the board?
Thursday, June 18. We will get the results of the reopening auction of a 5-year Treasury Inflation-Protected Security at 1 p.m. EDT, which translates to 7 p.m. CEST. We are traveling with friends, so my timing on this is uncertain. I will eventually post the auction results on Thursday.
That’s all I have marked on my calendar through my return on June 28. If you know of other upcoming events worthy of “vacation attention,” let me know in the comments.
The trip
We are not starting in Paris, so ignore that.
I adore France and the French (probably an unpopular opinion, I know) and have traveled through most of the country, north to south. Never been to Marseille. We will be using that city as a base to travel around the south until reaching Avignon, where we will board the Viking longship Buri for a week-long trek on the Rhône to Lyon.
Along the way we will see some new places: Viviers, Tournon, Vienne. But mostly this trip will be about enjoying time with our friends, combined with great wine and great food. And I will get to butcher my basic French along the way. (This results in the French switching to English, tout de suite!)
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Donate? This site is free and I hope to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.
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.
The U.S. Treasury on Thursday will auction $24 billion in a reopened 5-year Treasury Inflation-Protected Security, CUSIP 91282CQP9, creating a 4 year, 10-month TIPS.
The auction comes after months of surging real yields following the outbreak of war in the Mideast, surging energy costs and accelerating U.S. inflation. Since the war began on Feb. 28, the 5-year real yield has increased a remarkable 71 basis points.
At this point, however, the 5-year real yield is still well off its recent-history high of 2.59% set on Oct 3, 2023.
CUSIP 91282CQP9 had its originating auction April 23, when it got a real yield to maturity of 1.367%, well below the current market of 1.82%. Its coupon rate was set at 1.25%.
This TIPS trades on the secondary market, where it closed Friday with a real yield of 1.79% and a price of 97.51.
Definition: The “real yield to maturity” of a TIPS is its yield above future U.S. inflation, over the term of the TIPS. So a real yield of 1.79% means an investment in this TIPS would provide a return that exceeds official U.S. inflation by 1.79% for 4 years, 10 months.
Here is the trend in the 5-year real yield over the last 16 years, showing that the current yield remains in the high range for this maturity:
Click on image for larger version.
Volatile events
War and peace. As we entered this weekend, the U.S. and Iran appeared to be on the “cusp of peace,” a nice term the Wall Street Journal used in a Saturday headline. Or not. We all know how this goes — edge of peace to edge of war, within a day.
Any declaration of “peace” would likely set oil prices rolling back, a trend that is already underway, with the price of Brent crude falling from $112 on May 18 to $87 on Friday. But it could be long time before prices return to the pre-war level of about $69.
A true peace announcement could also send stock prices higher and provide relief for the Treasury market. Maybe.
The Federal Reserve. The Fed’s Open Market Committee will meet this week and at 2 p.m. ET Wednesday — 23 hours before the TIPS auction — we will hear that the federal funds rate is on hold. No surprise there, but because this will be the first meeting under the leadership of Chairman Kevin Warsh, markets will be watching closely.
Although Warsh has said he wants less public communication from the Fed, it is scheduled to release a “Summary of Economic Projections” and Warsh plans to hold a news conference after the meeting. So many questions:
Will the FOMC statement drop its “easing bias,” signaling the possibility of future rate increases?
Will Warsh suggest he is open to future rate increases, if needed?
Will the governors go along with Warsh’s plans to reduce the Fed’s balance sheet, which could cause long-term rates to rise?
What will the dot points predict for future interest rates, inflation and economic growth?
How much dissent will we see from voting members of the board?
Because all this Fed news will break one day before Thursday’s TIPS auction, you can expect to see some ripple-effects in the auction’s real yield. Be aware of that coming volatility if you plan an investment.
Pricing
CUSIP 91282CQP9 closed Friday on the secondary market with a real yield of 1.79% and a price of 97.51. The price is discounted because the coupon rate of 1.25% is well below the current market yield. In addition, this TIPS will carry an inflation index of 1.02135 on the settlement date of June 30.
With that information, we can estimate the cost of a $10,000 par value investment at Thursday’s auction, based on Friday’s close. The numbers will certainly change by the auction, but this is a reasonable guide:
Par value: $10,000.
Principal purchased on settlement date: $10,000 x 1.02135 = $10,213.50
Cost of investment: $10,213.50 x 0.9751 = $9,959.18.
+ $26.51 of accrued interest.
In summary, based on Friday’s close, an investor would pay $9,959.18 for $10,213.50 in principal as of the settlement date. From then on, the investor would earn inflation accruals and an annual coupon rate of 1.25% on adjusted principal until maturity.
Side note: In putting these numbers together, I was fascinated to see that non-seasonally adjusted inflation will have increased 2.13% in the 2 1/2 months this TIPS has existed, as of June 30. And let’s look out to July 31: This TIPS was first issued April 15 with an inflation index of 1.00000. On July 31, its inflation index will be 1.02788, an increase of 2.79% in 3 1/2 months. That is shocking.
Inflation breakeven rate
With the 5-year Treasury note closing Friday with a nominal yield of 4.21%, CUSIP 91282CQP9 currently has an inflation breakeven rate of 2.42%, a bit below recent auctions of this term. I’d expect a higher number. Inflation over the last five years ending in May has averaged 4.5%.
Here is the trend in the 5-year inflation breakeven rate over the last 16 years, showing the relatively stable (and unreliably low) pattern in recent years:
Click on image for larger version.
Alternatives
I Bonds. A Series I Savings Bond purchased today will get a composite rate of 4.26% for six months and a permanent fixed rate of 0.9%. The real yield of a 5-year TIPS is about twice that. A quick metric is to apply the 0.65 ratio to the TIPS’s real yield, which results in 1.16%. At this point, the TIPS appears more attractive despite the many good qualities of an I Bond — deflation protection, tax-deferred interest and better compounding of interest.
Bank CDs. Best-in-nation 5-year bank CDs are paying about 4.10%, slightly lagging the 5-year Treasury. I’d prefer the TIPS.
Thoughts
This will be an interesting auction, for sure, simply because of all the global and political events swirling this week. I won’t be a buyer because I have filled the 2031 rung of my TIPS ladder, with real yields ranging from 1.42% to 2.03%.
A real yield around 1.80% looks fine to me, but understand that if the Federal Reserve does begin increasing short-term rates, the 5-year real yield would likely climb higher.
If you want to invest, there is no need to commit to the auction. This TIPS can be purchased on the secondary market through a brokerage account. So if you see a real yield you like, you have that option.
The advantage of buying at auction, especially through TreasuryDirect, is that even small-lot purchases will get the auction’s high yield. The advantage of the secondary market is that you can see exactly the price and real yield you will be receiving. The negative is that you may face a small bid-ask spread. Most of the time, it doesn’t make a huge difference.
This TIPS auction closes Thursday at 1 p.m. ET. 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 sometime on Thursday. Here is a history of auction results for this term over the last 5 years:
Donate? This site is free and I hope to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.
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.
While the news was expected, the May inflation report issued today by the Bureau of Labor Statistics is disturbing: U.S. all-items inflation rose 0.5% for the month on a seasonally-adjusted basis, rising to an annual rate of 4.2%, the highest since April 2023.
Core inflation, which strips out food and energy, was a bit tamer with a rise of 0.2% for the month and 2.9% for the year, up from 2.8% in April. The monthly core rate was below expectations — the one sliver of good news this morning.
In just over three months since the beginning of the Iran conflict, U.S. annual inflation has increased from 2.4% in February to 4.2% in May. The rate of increase may ease going forward, but U.S. inflation is likely to linger above 4.0% for many months.
The BLS noted that the energy index rose 3.9% in May, accounting for about 60% of the increase in all-items inflation. Gasoline prices were up 7.0% in May and are now up 40.5% over the last 12 months. Also from the report:
Food at home prices rose a moderate 0.1% for the month and are now up 2.7% for the year. These costs could rise as higher transportation costs are passed through.
Beef prices fell 1.6% for the month, but are up 12.9% for the year.
Egg prices rose a surprising 4.0% for the month but are down 35.2% for the year.
Shelter costs rose 0.3% for the month and 3.4% for the year.
Apparel prices rose 0.3% for the month and 4.8% for the year.
Airline fares rose 2.7% for the month and are now up 26.7% for the year.
Costs for new vehicles fell 0.3% in May and are up only 0.2% for the year.
Prices for used vehicles rose 0.1% for the month and were down 0.2% for the year.
The report shows the huge effect gasoline prices are having on U.S. inflation, which could be causing some deflationary pressures for other categories as consumers deal with higher commuting costs. The gas-price effect could ease if the conflict with Iran is resolved, but benefits could be many months away.
Meanwhile, inflation expectations will be rising, a dangerous trend. Here is the 12-month trend for all-items and core inflation, showing the burst higher since the war began on Feb. 28. Notice, however, that core inflation continues to inch higher even without the effect of higher gas prices.
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.
The BLS set May’s CPI index at 335.123, an increase of 0.63% for the month, following an increase of 0.85% in April. These increases are higher than “headline” inflation because of the effects of seasonal adjustments. Later in the year, this trend will reverse.
For TIPS. The May report means principal balances for all TIPS will increase 0.63% in July, after rising 0.85% in June. Over the last year, principal balances will have increased 4.2% at the end of July. Here are the new July Inflation Indexes for all TIPS.
For I Bonds. The May report was the second of a six-month string that will determine the I Bond’s new variable rate, to be reset November 1 based on inflation for the months of April to September. So far, after just two months, inflation has increased 1.49%, which translates to a variable rate of 2.98%. But there are four months left to go. Prediction: I Bonds are going to get very popular later this year.
Here is a key point: The U.S. inflation rate at 4.2% is now well above the effective Federal Funds rate of 3.61%. This can’t be tolerated for long. So either inflation needs to start trending lower, or the Federal Reserve will have to signal the possibility of higher rates.
This is complex. Gas prices could be causing a “transitory” spike, and actually causing some deflation in other economic areas. It will take time to see the end result.
The Fed’s Open Market Committee will meet next week under the leadership of new Chairman Kevin Warsh. Prediction: the Fed will stand pat on rates, but will need to signal that rate increases are under consideration. Warsh will be walking a tightrope.
On the positive side, core inflation has not yet surged higher. That would be a dangerous trend. From Anna Wong and Troy Durie of Bloomberg Economics this morning:
Overall, the CPI report sent a clear signal that consumers are pulling back on nonessential spending, pushing back against business attempt at price hikes. This should ease fears of Fed rate hikes following the blowout May payrolls report. We still expect policymakers to cut rates by 25 basis points in the fourth quarter of the year.
This is from Olu Sonola, head of U.S. economics at Fitch Ratings:
Headline inflation is hot — and getting hotter — an unwelcome handoff as the new Fed Chair takes the wheel. But this is not yet a panic-hike story. Core inflation remains relatively contained, giving the Fed room to stay on hold for a while longer. The burden now falls on the next few core readings and inflation-expectations data: if they stay contained, the Fed can look through the headline heat; if they crack, the rate-hike debate moves front and center.
From Seema Shah, chief global strategist for Principal Asset Management:
Inflation remains uncomfortably high at 4%, but the softer-than-expected core reading takes some of the pressure off. With energy driving much of the increase and shelter easing, we’re not yet seeing clear sign of broader second-round effects. This should allow the Fed to remain patient.
From this analysis, and because of the political pressures involved, I think we won’t see any change in the federal funds rate for several months. Longer-term interest rates could continue rising, however.
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Donate? This site is free and I hope to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.
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.
A new research paper by a Marquette University professor found that Series I Savings Bonds created annual returns substantially higher than high-yield savings accounts (HYSAs) between 1999 and April 2026.
Krause
The emeritus professor, Dr. David Krause, is the founding director of the university’s Applied Investment Management program. His academic focus encompasses investments, economics, statistics, and financial technology.
Krause’s paper is titled “High-Yield Savings Accounts vs. Series I Bonds: Which Is Better for Beating Inflation?” You can download a .pdf version here. This is from the abstract:
The historical analysis reveals that I Bonds delivered an average annualized real return of positive 0.83% over the 27 year sample period, while HYSAs delivered a negative 0.91% real return. …
I conclude that for investors with a holding period of at least one year, I Bonds offer a superior structural hedge against inflation compared to HYSAs. The $10,000 annual purchase limit remains the primary constraint for larger portfolios.
Krause notes that as of April 2026, U.S. inflation was running at 3.8%, but the national average interest rate on a standard savings account was just 0.38%. In response, many savers are turning to I Bonds and HYSAs to safely boost returns.
What is an HYSA? High Yield Savings Accounts are deposit accounts offered primarily by online banks and credit unions, Krause notes. They provide significantly higher annual percentage yields than savings accounts at traditional banks.
The Federal Reserve does not track HYSA rates, and data for years past are slim, so Krause created a “proxy” using an adjustment to the 1-year Treasury bill rate, currently 3.88%. Compare that to best-in-nation HYSAs at around 4.0%. Ken Tumin, who tracks savings yields on this site, posted this chart recently on X.com:
These best-in-nation yields are unusual, however, and note the declines from recent highs. A credit union where I have an account currently offers an HYSA with a yield of 3.2%. Similar products are Vanguard’s Cash Plus account at 3.35% or Fidelity’s Cash Management account with a money market fund yielding 3.29%. Tumin has noted:
Series I Savings Bonds can be useful for emergency funds. They’re as safe as HYSAs, they keep up with inflation, and you can defer federal income tax until you sell. They’re best used to supplement HYSAs since you can’t access them in the first year and there’s a purchase limit.
As of May 2026, top tier HYSAs offer APYs between 4.0% and 4.1%. However, these rates are variable and change at the discretion of the issuing institution. Unlike I Bonds, HYSA rates have no direct contractual link to inflation. They may fall even as inflation rises, a phenomenon observed during the 1970s and again during the post 2008 period. …
My central finding is that while HYSAs offer superior liquidity, I Bonds provide a superior structural hedge against inflation.
Here is a key illustration from the Krause study, showing a comparison of above-inflation returns for I Bonds versus HYSAs:
Blue line shows I Bond real return. Orange line shows HYSA real return. Horizontal black line at zero indicates breakeven. Red shading indicates periods of negative real returns for HYSAs.
Krause’s research showed that I Bonds offered substantially better returns — and better protection against inflation — than HYSAs over the 27-year period.
I Bonds delivered positive real returns in 239 of 310 months, which represents 77.1% of the sample period. The average annualized real return was positive 0.83%. Even during challenging periods such as the 2008 financial crisis and the 2022 inflation spike, I Bonds maintained positive or only slightly negative real returns due to their inflation linked variable rate and the principal floor.
HYSAs delivered positive real returns in only 99 of 310 months, which represents just 31.9% of the sample period. The average annualized real return was negative 0.91%. HYSA real returns turned negative during every significant inflation acceleration. These periods included 2000 to 2001, 2005 to 2006, 2008 briefly, 2011, and most dramatically in 2021 to 2023. At the trough of the 2022 inflation spike, HYSA real returns fell to negative 0.61% on a monthly basis.
And here is another important illustration from the study:
Blue line shows I Bonds growing to $12,363 in real dollars by April 2026. Orange line shows HYSAs declining to $7,884 in real dollars, losing value versus inflation.
Keep in mind that the chart shows the effect of inflation on purchasing power, so these are inflation-adjusted returns, not nominal returns. Krause points out:
In nominal or non-inflation adjusted terms, both investments grew. However, inflation eroded the HYSA purchasing power below its initial level. The I Bond, by contrast, preserved and modestly enhanced purchasing power despite two severe inflation shocks in 2008 and 2022 and a prolonged period of near zero interest rates from 2010 to 2021.
Liquidity and Penalty Considerations
Krause looked at the early-withdrawal penalty for I Bonds and found that early redemption substantially reduced the one-year real return, down to 0.19% versus 0.87% for current I Bonds held five years.
This finding suggests that I Bonds are best suited for funds that can be committed for at least two to three years. For true emergency funds requiring immediate access, a HYSA may be more appropriate despite its lower expected return.
Conclusion
As noted in the comments section, Krause’s proxy for past HYSA yields seems to underestimate top-of-market yields and instead tracks closer to “more typical” yields offered online and at banks and credit unions. But I think his conclusions are sound.
Krause notes that “I Bonds have historically provided superior inflation protection compared to HYSAs.” That trend, Krause believes, will continue into future years:
This advantage is projected to continue based on forward looking scenario analysis. The mechanism is clear. I Bonds have a direct contractual link to the Consumer Price Index through their variable rate. HYSAs depend on the monetary policy transmission mechanism, which introduces lags and uncertainty.
The fixed rate component of I Bonds is particularly valuable. Currently at 0.90%, it guarantees a positive real return regardless of inflation before accounting for taxes. HYSAs offer no such guarantee.
I Bonds versus 4-week T-bills
I am definitely not an academic researcher, but I did get a small mention in Krause’s paper. In my case, I have been tracking the performance of the I Bond’s variable rate (minus any fixed-rate adjustment) versus the returns of 4-week Treasury bills.
The pure variable-rate yield is reflected in I Bonds with a 0.0% fixed rate. Those aren’t highly attractive these days, with the fixed rate now set at 0.9% and looking likely to rise higher at the November 1 reset.
Here is how this performance stacks up, looking ONLY at the I Bond’s variable rate versus the then-current 4-week T-bill yield.
Even without the effect of any fixed rate, I Bond yields on average have surpassed both 4-week T-bill yields and the U.S. inflation rate since 2011. Why did this happen? Because for many years after 2011 the Federal Reserve held short-term interest rates well below the U.S. inflation rate (a trend that has now returned). The April 2026 inflation rate of 3.8% is shown in the chart, and May’s annual rate is expected to be higher. We will get the May 2026 report Wednesday morning.
Add in the fixed rate, and obviously the performance becomes much better. For example, the current six-month composite rate is 4.26%, much better than the 4-week’s nominal yield of 3.71%. Here is a chart generated by Claude AI that compares the I Bond’s composite rate versus the top HYSA rate over the last 20 years:
This was my query to Claude: “How do returns of Series I savings bonds compare with HYSAs over the last 20 years?” There are times of I Bond under-performance, but those are minimal compared to strong out-performance by I Bonds during inflationary surges. This was Claude’s closing commentary:
I bonds have been a better deal in high-inflation environments (2021–2022) and when the Fed keeps rates near zero. HYSAs shine when the Fed is in a tightening cycle and inflation is cooling. Right now they’re close enough that the decision really comes down to whether you need the liquidity.
Final thoughts
I Bonds purchased today offer the advantage of a guaranteed 0.9% return above U.S. inflation, for as long as you hold the bond. High-yield savings accounts could surpass inflation, but there is no guarantee. And the interest rate could fall if market trends send short-term rates lower.
There is a use for both investments. I Bonds work well for holdings of five years or longer and T-bills and HYSAs for short-term cash needs. Krause notes:
For the retail investor asking which is better for beating inflation, the historical and forecast evidence points clearly to Series I Savings Bonds.
Donate? This site is free and I hope to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.
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.
AI image for “money in the multiverse.” Perchance.org
By David Enna, Tipswatch.com
Many of us here are strongly committed to holding investments in Treasury Inflation-Protected Securities to maturity. That means trading is not an issue, despite the temptations. It also means the “current market value” of a TIPS becomes a bit irrelevant.
So this opens a topic for debate: Which TIPS value should you follow more closely — current adjusted principal or current market value? This is a dilemma I wrote about last year in this post: The unique serenity of holding TIPS at TreasuryDirect.
A reader brought this back to my mind last week with this question:
I have a challenging time putting a proper “current value” on my TIPS ladder holdings. … I hold all my bonds to maturity. There-in lies the problem, when I go to make my semi-annual spreadsheet. Fidelity shows a value that marks-to-market daily each holding. Since I’m a “hold to maturity” only investor, that valuation doesn’t represent the value to me of that holding.
I think a proper “hold to maturity” current valuation to me is the current inflation adjusted principal. Is this a good “current value” accounting for a “hold to maturity” investor?
That sums it up perfectly. TreasuryDirect shows only one valuation for TIPS: par value x inflation index as of the last coupon payment. This provides an update on the growing amount you will receive when the TIPS matures. It is a legitimate view of value. Key point: TreasuryDirect does not allow tax-deferred accounts and you can’t sell your TIPS on that platform.
Your brokerage account shows market value, which rises and falls with changes in real yields, along with daily inflation accruals. This is also a legitimate view of value, and is crucial for determining RMDs if you are holding TIPS in a tax-deferred account. Also, since you can sell a TIPS at a brokerage, market value shows the potential value for a sale.
At this point, because longer-term TIPS real yields are at 15-year highs, market values for most TIPS are well below accrued principal. The difference is rather stunning for a multi-year ladder of TIPS, as shown in this example:
Keep in mind that as a TIPS nears maturity, market value becomes less and less relevant. It disappears at maturity and the final pay-out is: par value x inflation index, plus one last coupon payment.
The chart shows a simple way to calculate current principal using Excel. You just need to know par value and the current inflation index, which gets updated daily on this Wall Street Journal page, outside the paywall.
The chart also demonstrates why June 2026 is an excellent time to build a long-term ladder of TIPS. You can grab a lot of accrued principal at a discounted price. The negatives are: 1) the principal above par is not protected against deflation (a minor risk) and 2) the cash flow from coupon income won’t be stellar.
At Tipsladder.com, you can run through ladder scenarios. Right now, according to the site, you can build a 30-year ladder with a composite real yield of 2.50% and a safe withdrawal rate of 4.7%.
I Bonds? Not an issue
Series I Savings Bonds can never go down in value and cannot be traded on the secondary market. There is no “market value.” They have only one value to track: current adjusted principal, which changes on the first day of each month. TreasuryDirect will show you that current value, which you can also see using the Savings Bond Calculator or data from EyeBonds.info.
Correct answer?
As much as I would like to, I can’t ignore market value because most of my TIPS holdings are in a tax-deferred account subject to RMDs, which are based on market value at the end of the year. Also, your brokerage has to track market value because it changes daily, and some investors want to trade out of TIPS.
Not a great film.
I am fine with seeing market value in the brokerage account. But I also keep an Excel spreadsheet showing the accrued principal for each TIPS, and I use that amount to balance out the years in my TIPS ladder. (I update the spreadsheet a few times a year.) The accrued principal will continue adjusting for inflation until maturity, so it does represent future inflation-adjusted cash flow.
Using the Excel method creates the illusion of a zero-duration bond with no interest-rate risk, similar to tracking an I Bond. Many Bogleheads freak out when I suggest this and yes, they are right. There is interest rate risk (or potential gain) if you want to trade out of TIPS.
Since I am not going to sell a TIPS before maturity, this is the multiverse reality I prefer.
Just to be clear, I am not a big fan of the multiverse trend in movies, especially Marvel movies, where it is way overused. But here is a multiverse treat, the closing credits theme from Loki season 1, episode 5, by the fantastic composer Natalie Holt. (She wrote different closing themes for every episode. Talk about multiverse!) This is one of my favorites of all time:
Donate? This site is free and I hope to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.
Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).
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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.
Treasury Inflation-Protected Securities 
Have a great time. Please say hello to our French allies.