10-Year TIPS Reopening Generates Attractive Real Yield Of 0.910%

Posted on September 20, 2018 by

Summary

  • The real yield of 0.910% was the second highest of this term through 43 auctions since May 2011.
  • The inflation breakeven rate came in at 2.15%, on the higher end of recent auctions, but still acceptably in the “neutral zone.”
  • Investors got an attractive yield, a good coupon rate of 0.750%, and a decent price versus nominal Treasurys.

Real my full analysis on SeekingAlpha.com

Advertisements
Posted in Investing in TIPS | Leave a comment

Thursday’s 10-Year TIPS Reopening Looks Attractive, But …

Posted on September 16, 2018 by

Summary

  • The current trend indicates a real yield around 0.88%, which is attractive, at least based on auctions over the last seven years.
  • The problem? A 5-year TIPS is currently yielding 1 basis point higher than a 10-year. Why buy a longer-term with a lower yield?
  • The inflation breakeven rate is trending at 2.12%, still in the “neutral zone” and below current U.S. inflation of 2.7%.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

August Inflation Rises 0.2%: What It Means For Social Security, TIPS, And I Bonds

Posted on September 13, 2018 by

Summary

  • August headline inflation came in below the consensus for the month and year. Core inflation was also below the consensus.
  • The current trend in CPI-W would place the 2019 Social Security cost-of-living increase in a range of 2.7% to 3.0%, with one month remaining for the calculation.
  • Non-seasonally adjusted inflation increased just 0.06% in August, after a 0.01% increase in July. What does this mean for TIPS and I Bonds?

Read my full analysis on SeekingAlpha.com

Also:

  1. I have updated my Tracking Inflation and I Bonds page with the new numbers.
  2. I have also updated my Social Security COLA page with an update on the 2018 calculation.
  3. And here are the updated October Inflation Indexes for all TIPS.

Posted in Investing in TIPS | Leave a comment

5-Year TIPS Gets Real Yield Of 0.724%, Highest In Nearly 9 Years

Posted on August 23, 2018 by

Summary

  • Investors got this reopened TIPS at a discount, because the real yield was higher than the coupon rate of 0.625%.
  • The inflation breakeven rate came in at 1.99%, slipping 13 basis points since the originating auction in April. This is a positive for investors.
  • Reaction to the auction looks positive, with the TIP ETF getting a slight bump higher after the auction’s close.

Read my full analysis on SeekingAlpha.com

Here’s the nine-year trend in 5-year real yields:

Posted in Investing in TIPS | Leave a comment

5-Year TIPS Reopening: Don’t Let Dip In Real Yields Scare You Away

Posted on August 19, 2018 by

Summary

  • Real yields for this term have dipped about 8 basis points since August 1. Not a great trend heading into an auction week.
  • But current after-inflation yields above 0.75% are attractive, and would be the highest yield at auction for this term in nearly 9 years.
  • The inflation breakeven rate has dipped below 2.0%, a positive trend for TIPS investors.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

July Inflation Rises 0.2%: What This Means For TIPS, I Bonds And Social Security

Posted on August 10, 2018 by

Summary

  • 12-month core inflation rose to 2.4%, the highest number since September 2008.
  • Non-seasonally adjusted inflation was essentially flat, meaning minimal principal increases for TIPS and little change in the six-month total that will reset the I Bond’s variable rate.
  • CPI-W was also flat, marking the first month of the three-month period that will set Social Security’s COLA for 2019.

Read my full analysis on SeekingAlpha.com

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

Also updated: Social Security COLA calculations.

And here are new September Inflation Indexes for all TIPS.

Screen Shot 2018-08-10 at 7.45.57 AM

Posted in Investing in TIPS | Leave a comment

Is The Flat Yield Curve Distorting The Value Of TIPS Mutual Funds?

Posted on August 6, 2018 by

Summary

  • Real yields are out of balance with historical norms. A 5-year TIPS is yielding only 13 basis points less than a 30-year TIPS.
  • Are we heading toward a recession? Would TIPS mutual funds benefit? Possibly, if the Federal Reserves steps in. Or, would a deflation scare set in?
  • The U.S. Treasury’s sharply increasing need to raise debt should force longer-term yields higher, sending TIPS funds lower.

One indicator I have watched for a long time is a price of $110 on the TIP ETF, which has marked a “buy signal” over the last seven years. Is that still valid?

Read my full analysis on SeekingAlpha.com

TIPS yields

Posted in Investing in TIPS | Leave a comment