Say ‘No’ To This Week’s 30-Year TIPS Auction

Summary

  • While shorter-term real yields have been gradually increasing, the 30-year yield has actually been declining.
  • Investors at Thursday’s auction will probably pay a 2% premium over par value because this TIPS currently has a market yield below the coupon rate of 1.00%.
  • On the positive side, the current inflation breakeven rate of 2.13% is reasonable and attractive.

Read my full analysis on SeekingAlpha.com

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Annual U.S. Inflation Hits 6-Year High In May Report

Summary

  • ‘Headline’ inflation rose 0.2% in May, but is up 2.8% over the last 12 months, highest since February 2012.
  • Core inflation also increased 0.2%, showing that gasoline prices are not the sole source of inflationary pressure.
  • Non-seasonally adjusted inflation was up 0.42% in May. What does this means for holders of TIPS and I Bonds?

Read my full analysis on SeekingAlpha.com

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

And here are the new July inflation indexes for all TIPS.

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Here’s A Step-By-Step Guide To Using The Treasury’s New Savings Bond Calculator

Summary

  • The Savings Bond Wizard has been a useful tool for Savings Bond investors for more than 15 years. Now it is gone.
  • The Treasury has replaced it with the Savings Bond Calculator, a similar Web-browser-based tool that is a bit less user friendly.
  • I’ve created a step-by-step guide for exporting your bond data from the Wizard to the Calculator.

Read my step-by-step guide at SeekingAlpha.com

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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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