10-Year TIPS Reopening Auctions With A Real Yield Of 0.369%

Summary

  • The real yield was about 37 basis points higher than the early October trend.
  • The inflation-breakeven rate of 1.90% was the highest since May 2015.
  • TIPS are drawing attention as fears of future inflation rise.

Today’s reopening auction of CUSIP 912828S50 – creating a 9-year, 8-month Treasury Inflation-Protected Security – resulted in a real yield of 0.369%. Here’s is the Treasury’s auction summary.

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U.S. Inflation Rose 0.4% In October; Does That Lock In A Fed Rate Increase In December?

Summary

  • While 0.4% looks high, core inflation remained in the moderate zone, just above 2.0% over the last 12 months.
  • Energy costs, along with shelter costs, accounted for most of the October increase.
  • There is nothing in today’s report that should cause the Federal Reserve to delay an interest rate increase in December.

Read my full analysis at SeekingAlpha.com

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

And here are the new TIPS inflation indexes for December.

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TIPS Yields Are On The Rise; Is That Enough To Make Thursday’s 10-Year TIPS Reopening Attractive?

Summary

  • The after-inflation yields on TIPS have been rising sharply over the last month.
  • But TIPS are out-performing the overall bond market, with yields rising at a slower pace.
  • A rise in the 10-year inflation-breakeven rate indicates that investors are pricing in higher inflation, and also that TIPS are getting more expensive versus nominal Treasurys.

The after-inflation yield on a 10-year TIPS is rising again today and is up more than 30 basis points since October 1. Will that be enough to make Thursday’s 10-year TIPS reopening attractive?

Read my full analysis on SeekingAlpha.com

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Breaking News: Treasury Drops The Fixed Rate On I Bonds To 0.00%; EE Bonds Retain 20-Year Doubling

Summary

  • With the 10-year TIPS yielding just 0.11%, the Treasury couldn’t justify continuing the 0.10% fixed rate.
  • But the I Bond will get a six-month variable rate of 2.76%, making it an attractive 1-year investment, no matter what happens in the second six months.
  • EE Bonds remain a very attractive super-safe investment for anyone would can hold them for 20 years.

Disappointing? Yes. But all I Bonds – no matter when they were purchased – will earn a variable rate of 2.76% for six months.

Read my analysis on SeekingAlpha.com

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‘I Bond’ Countdown: Buy Before The November 1 Rate Reset, Or Wait?

Summary

  • Buy now? You guarantee a one-year return of 1.56%, which is attractive.
  • Wait until November 1? You could lose the 0.1% fixed rate, but earn more money in one year anyway.
  • Either way, this isn’t going to be a bad investment.

Yes, a 0.10% fixed rate may not seem like a big deal, but realize this: A 10-year TIPS is currently yielding 0.11%. I Bonds with a fixed rate of 0.1% and an attractive variable rate are going to be a hot investment through May 2017. But what if the fixed rate falls to 0.0%?

Read my analysis on SeekingAlpha.com

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30-Year TIPS Reopening Auctions With A Real Yield Of 0.666%, Lowest In More Than 3 Years

Summary

  • Buyers had a pay a big premium for the 1.00% coupon rate, about $110.67 for $101.65 of value, when accrued inflation is added in.
  • The inflation breakeven rate came in at about 1.83%, 31 basis points higher than at the originating auction in February.
  • The trend in breakeven rates indicates rising expectations for inflation.

Read my full analysis at SeekingAlpha.com

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Will The Treasury Drop The I Bond Fixed Rate To 0.0%? Here’s Why It Could Happen.

Summary

  • The data support a drop to a 0.0% fixed rate, but wouldn’t the Treasury be sending an awful message?
  • You can buy now to lock in the I Bond’s current 0.1% fixed rate, or wait until November 1 and get the higher variable rate immediately.
  • A bigger question: Does a fixed rate of 0.1% really matter?

A lot of readers have been asking me why I think the Treasury could drop the I Bond fixed rate to 0.0% on November 1. I’d say if it were purely a data-driven decision, the Treasury will go with a 0.0% fixed rate. But I am hoping it will stick with 0.1% as a nod to small investors who rely on I Bonds for inflation-protected savings.

Read my full analysis at SeekingAlpha.com

 

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