10-Year TIPS Reopening Generates Real Yield Of 0.934%, Highest In 7 Years

Summary

  • This was the highest after-inflation yield for any 9-to-10 year TIPS auctioned since January 2011.
  • A yield of 0.934% above inflation is moving the return on a 10-year TIPS back into “more normal” levels after years of yield suppression.
  • The inflation breakeven rate was 2.18%, higher than any recent auction. Inflation expectations are rising.

Read my full analysis on SeekingAlpha.com

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10-Year TIPS: Thursday’s Reopening Is Another Attractive Auction

Summary

  • The real (after-inflation) yield looks likely to climb above 0.80%, a seven-year high for TIPS of this term.
  • The inflation breakeven rate is climbing toward 2.15%, meaning this TIPS is not “cheap” versus a nominal Treasury. But it’s not “expensive,” either.
  • Think real yields will continue climbing? You’ll have three more chances in 2018 to buy a TIPS of this term.

Read my full analysis on SeekingAlpha.com

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U.S. Inflation Rose 0.2% In April, 2.5% Over Last 12 Months

Summary

  • Headline inflation rose 0.2% in April, below the consensus estimate of 0.3%.
  • Core inflation was up 0.1% for the month and has increased 2.1% over the last 12 months. That’s the definition of ‘moderate inflation.’
  • Non-seasonally adjusted inflation was up 0.4% in April, meaning holders of TIPS will see principal balances rise 0.4% in June.

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 June inflation indexes for all TIPS.

 

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Treasury Raises I Bond Fixed Rate To 0.30%, Highest Since 2009

Summary

  • I Bonds purchased from May 1 to October 31 will carry a composite rate of 2.52% annualized.
  • Real yields have been rising, which supports the Treasury’s decision to increase the fixed rate to 0.30%, the highest rate reset since November 2009.
  • A new I Bond buying strategy? In my opinion, the fixed rate of 0.30% is too attractive to pass up.

Read my full analysis on SeekingAlpha.com

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5-Year TIPS Auctions With A Real Yield Of 0.631%, Highest In Nearly 9 Years

  • The after-inflation yield was the highest for any 4- to 5-year TIPS auction since October 2009.
  • The coupon rate was set at 0.625%, the first time any TIPS of this term has had a coupon rate higher than 0.125% since April 2010.
  • The inflation breakeven rate came in a 2.13%, higher than in recent auctions but still in a ‘neutral’ range.

Read my full analysis on SeekingAlpha.com

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Thursday’s 5-Year TIPS Auction May Be The Most Attractive In Years

Summary

  • Current trends are pointing at a real yield above 0.65%, the highest for any 4- to 5-year TIPS auction since October 2009.
  • This TIPS will outperform a U.S. Series I Bond over five years and is very competitive with best-in-the-nation bank CDs.
  • The inflation breakeven rate should come in slightly higher than 2.0%, putting this TIPS in the “neutral” range versus on nominal Treasury.

Read my full analysis at SeekingAlpha.com

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I Bond Investors: Hold Off On Purchases Despite A Declining Variable Rate

Summary

  • The I Bond’s six-month variable rate will fall from 2.48% to 2.22% on May 1. The difference in yields is temporary and negligible.
  • The fixed rate will also be reset May 1, and odds are that it will hold at 0.1% — or rise to 0.2%, possibly even 0.3%.
  • The potential for a higher fixed rate means investors should delay purchases at least until after May 1, maybe even later.

Read my full analysis on SeekingAlpha.com

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