Treasury Inflation-Protected Securities

February inflation rose 0.3%, as expected. Is this our last ‘tame’ reading for awhile?

Posted on March 11, 2026 by Tipswatch

By David Enna, Tipswatch.com

The February inflation report, just released by the Bureau of Labor Statistics, already feels like ancient news. The U.S. inflation picture has changed dramatically 11 days into March, with gas prices and other energy costs soaring higher.

In February, seasonally adjusted all-items inflation rose 0.3% for the month and held steady at 2.4% for the year, the BLS reported. Core inflation rose 0.2% for the month (below expectations) but held steady at 2.5% for the year, its lowest rate since March 2021. All in all, this is what markets were expecting.

But … it’s old news. Inflation in March looks likely to run hotter because of rising energy costs (and related pass-on costs) and then in April we should get an adjustment to shelter data missing because of the October government shutdown. The new shelter data could also result in a boost to the annual rate. Plus, add in the year-over-year effect of mild deflation (-0.1%) in March 2025.

This is from Claude.ai on the effect of a 15% increase in gas prices:

Gasoline (all types) carries roughly a 3.5% weight in the all-items CPI-U basket. So a 15% increase in gas prices, in isolation, would contribute approximately: 3.5% × 15% ≈ +0.53 percentage points to the monthly all-items CPI reading.

As of this morning, the Cleveland Fed’s Inflation Nowcasting site is forecasting a monthly rate of 0.46% for March, and an annual rate of 2.87%, which would round to 2.9%. (FYI, these numbers are often wrong.)

In the February report, the BLS noted that shelter costs increased 0.2% for the month and are now up 3.0% for the year. But this is the one CPI statistic that looks most questionable because of October’s missing data. The BLS assumed shelter costs remained flat that month, which was highly unlikely. Also in the report:

Gasoline costs rose 0.8% in February, but were down 5.6% year over year. In March, so far, the increase has been at least 15%, but prices could continue to rise.
Fuel oil costs increased 11.1% for the month and are up 6.2% for the year.
Costs for piped gas service increased 3.1% for the month and are up 10.9% for the year.
Food at home costs rose 0.4% for the month and were up 2.4% for the year.
Costs of new vehicles held steady and are up only 0.5% year over year.
Costs of used cars and trucks fell 0.4% in the month.
Airline fares rose 1.4% for the month and 7.1% year over year.
Costs of medical care services rose 0.6% for the month and were up 4.1% for the year.

Overall, prices for a lot of categories were mildly higher, and only a few saw price declines. The mild shelter increase helped keep a lid on overall inflation. Here is the trend in U.S. inflation over the last year:

Note the missing October data and the dramatic move downward in annual inflation just after the missing month. Can I say this looks “suspicious”? Time will tell, especially after April when missing shelter data will be restored.

What this means for TIPS and I Bonds

Investors in Treasury Inflation-Protected Securities and Series I Savings Bond are also interested in non-seasonally adjusted inflation, which is used to adjust principal balances for TIPS and set future interest rates for I Bonds. The BLS set the February CPI index at 326.785, an increase of 0.47% over the January number.

For TIPS. The February inflation report means that principal balances for all TIPS will rise 0.47% in April, after rising 0.37% in March. While these seem like lofty numbers, this is a normal pattern in non-seasonally adjusted inflation at the beginning of the year. Here are the new April Inflation Indexes for all TIPS.

• Confused by TIPS? Read my Q&A on TIPS

For I Bonds. February marks the fifth of a six-month string that will determine the I Bond’s new inflation-adjusted variable rate, to be reset May 1 based on inflation for the months of October 2025 through March 2026. So far, with one month remaining, inflation has run at 0.61%, which translates to a variable rate of 1.22%, down from the current 3.12%.

• Confused by I Bonds? Read my Q&A on I Bonds

If non-seasonal inflation runs at 0.4% in March, we would end up with a variable rate of 2.02%. We could also see a slight decline in the I Bond’s fixed rate at the May 1 reset. I will be writing more about this in April. Here are the relevant data:

View 14 years of data on my Inflation and I Bonds page.

What this means for future interest rates

Forget February. The numbers were encouraging, but now with a “military operation” exploding in the Mideast, involving more than a dozen nations, all predictions are pointless. The Federal Reserve will need some sort of certainty before it decides to lower interest rates. For now, the Fed is on hold.

The current headline on Bloomberg is: US CPI Data Relegated to ‘Background Noise’ Amid Iran War. Good one, and accurate. Also from Bloomberg:

Federal Reserve officials are expected to leave interest rates unchanged at their policy meeting next week, a prediction that preceded the latest events in the Middle East. With the war threatening to push up inflation — at least in the near term — some investors now see a chance the central bank will remain on hold for longer.

From the Wall Street Journal:

Before the launch of the U.S.-Israeli war with Iran on Feb. 28, Wednesday’s inflation report would have been a key reading, shaping expectations for Federal Reserve policy in the months ahead. It has been transformed by the conflict into something more like a baseline—the reading against which economists will measure whatever the war does to prices in the months ahead.

“The February data is already completely inconsequential,” said Joseph Brusuelas, chief economist at RSM, shortly before the report was released.

I get criticized for using the word “uncertain” too often, but once again we have entered highly uncertain times. Now we must wait and watch.

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

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.

Posted in Cash alternatives, Federal Reserve, I Bond, Inflation, Investing in TIPS | Tagged economics, economy, finance, inflation, investing, personal-finance, Treasury investments | 4 Comments

Could Tipswatch.com be staffed by AI agents?

Posted on March 4, 2026 by Tipswatch

AI-generated image for “writer working under AI master.” Source: Perchance.org

By David Enna, Tipswatch.com

Before a shooting war broke out in the Mideast, the big topic of discussion in finance was an artificial intelligence doomsday scenario published Feb. 22 by Citrini Research with the title “The 2028 Global Intelligence Crisis.”

The hypothetical article (7,000 words!) began with a preface asking, “What if our AI bullishness continues to be right … and what if that’s actually bearish?” It was presented as a macro memo from the future — June 2028 — as the U.S. unemployment rate hit 10.2% and the S&P 500 continued falling, now down 38% from its October 2026 highs.

AI capabilities improved, companies needed fewer workers, white collar layoffs increased, displaced workers spent less, margin pressure pushed firms to invest more in AI, AI capabilities improved… It was a negative feedback loop with no natural brake. The human intelligence displacement spiral.

The Citrini article went viral, reaching more than 30 million readers and sparking intense investor anxiety. The S&P 500 fell 1.7% a day later as investors began shucking AI-vulnerable software stocks in reaction.

James Van Geelen, founder of Citrini Research and co-author of the article, has stressed that the piece was meant to present a possibility, not a prediction. He was interviewed in-depth on the OddLots podcast last week. Listen to that here:

Can I be replaced?

I will admit to using ChatGPT and other AI sources to research many personal topics, such as “Is sauerkraut considered a healthy food”? Answer: Yes, except watch out for the sodium. I also use AI frequently to create images for this website. But I never use AI as a source of information on Series I Savings Bonds or Treasury Inflation-Protected Securities.

So that leads to the question. Could this site, Tipswatch.com, be managed and written by AI agents instead of by me? I asked ChatGPT, and this is what I got:

Query: Could the website Tipswatch.com be staffed totally by AI agents with little or no human intervention?

No — Tipswatch.com is very unlikely to be completely staffed or run by AI agents with no human involvement. Here’s why:

✅ 1. Real human author is publicly credited

The website itself clearly states that it’s written by a real person: David Enna, a long-time financial journalist based in Charlotte, North Carolina, who has been writing the site for years and has a full “About Me” page describing his background and experience.

✅ 2. Articles carry a human byline

Recent posts on the site are credited to David Enna with “By David Enna, Tipswatch.com,” indicating human authorship rather than generic AI authors.

❓ 3. AI tools could be used — but not to fully replace humans

Like many blogs and publishers, Tipswatch.com might use modern tools — such as grammar editing, research assistants, or AI image generation for visuals — to speed up parts of the workflow. That’s common in independent publishing. But the byline, editorial judgment, and financial commentary rest on a named human writer, not anonymous bots.

Why people sometimes ask about AI staffing

There are low-quality or purported “AI-generated” sites online that publish content with little or no human oversight — sometimes without even real author names or verifiable identities. Industry tracking projects have found thousands of such sites producing content primarily with generative AI and minimal human editing. However, Tipswatch.com is not one of those; it attributes its content to a known journalist with a documented track record.

In short: While any modern site might use AI tools in the background (for editing, formatting, or assistance), Tipswatch.com is written and maintained by a real human author (David Enna), not exclusively by AI agents with little or no human intervention.

Reaction

Well, that’s nice. ChatGPT recognizes that I am human and my so-called job appears to be safe for the time being. Human beings remain important, at least in some cases.

A test posting

Next up, I launched a fresh search and asked ChatGPT to write an article on the recent auction of a 30-year TIPS. You can read my version here, but I gave ChatGPT no prompt or link to that article or this site. Here is the result:

Query: Write an analysis of the auction on Feb. 19, 2026, of a 30-year Treasury Inflation-Protected Security. What was the real yield and auction implications?

Here’s a clear analysis of the U.S. Treasury’s Feb. 19, 2026 auction of the 30-year Treasury Inflation-Protected Security (TIPS) — including the real yield result and what it implies for investors and markets.

📊 Auction Results: Real Yield and Demand

On February 19, 2026, the U.S. Treasury auctioned $9 billion of a new 30-year TIPS issue (CUSIP 912810US5). The key results were:

Real yield to maturity: 2.473 % — meaning the yield above inflation that investors will earn if they hold the security to maturity. This is measured after adjusting for expected future U.S. inflation.^{* Tipswatch.com}
This real yield was the second-highest for a 30-year TIPS auction since the Treasury restarted the long maturity in 2010, indicating strong investor compensation for locking in long-dated, inflation-protected returns.^{* Tipswatch.com}
The coupon rate was set at 2.375 %, slightly below the real yield, which resulted in the TIPS being sold at a discount price (~97.93) on issuance.^{* Tipswatch.com}
Bid-to-cover ratio: about 2.75, a solid demand indicator showing healthy investor interest relative to the amount offered.^{* Tipswatch.com}

📈 What the Real Yield Means

📌 1. Inflation Protection and Expected Returns

A real yield of 2.473 % means that investors are being compensated nearly 2.5 % above inflation for lending money for 30 years. In inflation-protected securities, this is a premium over both expected inflation and the inflation risk that might materialize over three decades. ^{* Tipswatch.com}

In the context of recent history, this is attractive from a long-term perspective — many TIPS auctions have seen significantly lower real yields over past cycles, particularly when inflation expectations were more uncertain. ^{* Tipswatch.com}

📌 2. Break-Even and Nominal Comparisons

Using contemporaneous nominal Treasury yields (e.g., 30-year Treasury nominal yield ~4.70 % around the same time), the inflation breakeven rate implied by this TIPS auction was roughly 2.23 %. This reflects what the market expects average inflation to be over 30 years; if actual inflation averages above that, the TIPS will outperform a nominal Treasury of similar maturity. ^{* Tipswatch.com}

📌 3. Market and Auction Implications

Strong Demand Signals

The bid-to-cover above historical norms suggests solid participation from investors, especially given that long-dated securities can sometimes struggle in weak markets. ^{* Tipswatch.com}

Treasury Financing Costs

For the Treasury, a higher real yield means higher long-term borrowing costs in real terms, though the robust demand at auction mitigates any immediate worries about financing stress.

Yield Curve and Macroeconomic Interpretation

Elevated real yields at the long end reflect market pricing of future inflation and interest-rate expectations, including a potentially higher neutral rate environment even as nominal yields and inflation expectations fluctuate. This hints that investors demand a meaningful real return to compensate for long-term risks. ^{* Tipswatch.com}
In broader market context (beyond TIPS specifics), nominal Treasury yields were somewhat volatile in February, influenced by mixed inflation data and changing views on rate cuts or geopolitical risk. ^{*TradingEconomics.com}^{*Linkedin.com}

📌 Investor Takeaways

Long-Term View: This auction reaffirms that TIPS can offer compelling real returns compared with historical norms, especially for holders who plan to keep them to maturity. ^{* Tipswatch.com}
Inflation Outlook: The implied inflation breakeven near ~2.2 % suggests that markets see long-run inflation close to Federal Reserve targets — not runaway inflation, but also not rapidly decelerating. ^{* Tipswatch.com}
Volatility and Duration: Investors should still expect volatility, especially in the long end, since TIPS prices move with real rates and inflation expectations. ^{* Tipswatch.com}

Bottom Line

The Feb. 19, 2026 30-year TIPS auction delivered a strong real yield at 2.473 %, with robust participation and a discount price reflecting active demand. For long-term, inflation-protected investors, the result was generally positive, signaling continued confidence in the Treasury financing mechanism and market appetite for real returns amid evolving inflation and rate expectations. ^{* Tipswatch.com}

Conclusion: I can’t be replaced!

And in fact, ChatGPT viewed Tipswatch.com as the sole source for information on that Feb. 19 auction. It referenced only two other sources where authors discussed overall trends in the Treasury market, not the auction itself.

—————————

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Posted in Investing in TIPS | Tagged investing, personal-finance, Treasury investments | 16 Comments

Economist Claudia Sahm: U.S. economic statistics are not being manipulated

Posted on March 1, 2026 by Tipswatch

By David Enna, Tipswatch.com

One of the most frequent questions I’ve heard from readers over the last year goes something like this: “Can we trust the government inflation numbers?” Or more bluntly: “Is the U.S. government lying to us?”

My usual answers are: “Maybe” on trust and “probably not” on outright lying.

This sense of fear and doubt erupted on Aug. 1, 2025, when President Trump fired the head of the Bureau of Labor Statistics, Erika McEntarfer, and accused her of “faking” jobs numbers. The firing came immediately after the release of the July 2025 jobs report, which came in lower than expected. But the bigger issue was a huge downward revision in jobs numbers for May and June, seemingly in the wake of April’s tariff-setting “Liberation Day.”

I’ve talked to former officials at the BLS who say they are absolutely confident that these longtime, nonpartisan statisticians would not agree to “cook the books” for any administration. But they also point to severe staff and funding cuts at the BLS, which could result in potential inaccuracies.

One person I trust on economic issues is Claudia Sahm, a former Federal Reserve official who created the “Sahm Rule,” a reliable indicator of recession based on employment data. Sahm, now chief economist at New Century Advisors, is known for being a “bit” outspoken, a rare trait for a macroeconomist.

Sahm writes on economic data on her Substack site, Stay-At-Home Macro, which conveniently abbreviates to her name, SAHM. The site is free to read and I highly recommend it. You can also follow her on X at @Claudia_Sahm, where she freely expresses her opinions.

Sahm wrote a Feb. 20 Substack post with the title “Trust in Numbers,” where she analyzed the U.S. government’s credibility issues. I am going to highlight some of her thoughts, but I encourage you to read her entire post.

There is currently no evidence of manipulation. Even so, it is appropriate to monitor for signs of it.

Sahm noted that fired BLS director McEntarfer rejected the idea of political interference in a recent interview, saying, “You should still trust BLS data. The agency is being run by the same dedicated career staff who were running it while I was awaiting confirmation from the Senate. And the staff have made it clear that they are blowing a loud whistle if there is interference.”

However, the U.S. government shutdown in October 2025 cut off data collection for an entire month and created nearly impossible barriers to accuracy. Sahm noted that the BLS was forced to rely on long-documented methods to estimate inflation:

The BLS chose procedural consistency over discretionary adjustment. That choice matters because the CPI is more than a statistic. It is written into law and contracts, such as those that adjust Social Security benefits, Treasury Inflation-Protected Securities (TIPS), and countless private agreements. …

Safeguarding against manipulation is necessary, but not sufficient for data to be trustworthy. Even when the process is sound, trust can erode if people feel the statistics do not align with their lived experience.

Sahm elaborated on that thought in a recent interview with Yahoo Finance:

“We have to remember people pay prices,” New Century Advisors chief economist @Claudia_Sahm says. “They don't pay inflation.” pic.twitter.com/mU2R7pjvT5
— Yahoo Finance (@YahooFinance) February 13, 2026

Sahm writes that she believes neglect, not manipulation, is harming U.S. economic data:

I am worried about the state of U.S. economic statistics. The current problem is not political interference; it is chronic and intensifying underinvestment. Budgets for statistical agencies have failed to keep pace with inflation for years, and conditions deteriorated further during the first year of the Trump administration.

The Bureau of Labor Statistics lost more than 20% of its staff since the fiscal year 2024, and 13 of its 35 leadership roles remain unfilled. Budget constraints led to a 15% reduction in the CPI sample and to the elimination of three cities from coverage. The federal government shutdown caused the first-ever break in the monthly unemployment and inflation series. …

Lower response rates and smaller sample sizes make the estimates less precise and more volatile. The threat to data quality is not manipulation—it is neglect.

Sahm concludes:

Trust in economic statistics depends on more than guarding against political manipulation. It requires sustained investment and public understanding of what the numbers can—and cannot—tell us. To preserve a reliable lens on the U.S. economy, we must protect both the integrity of the data and the institutions that produce it.

My thoughts

The potential for manipulation remains a threat. Trump’s first nominee to fill the BLS director’s post was an inexperienced economist with strong MAGA connections and a past history of “incendiary rhetoric.” Republican senators quietly joined together to kill that nomination. Trump’s current nominee, Brett Matsumoto, is a highly respected statistician that Sahm has strongly endorsed.

Beyond the threat of manipulation is the difficult issue of trust. I now sense widespread, bipartisan distrust of U.S. inflation numbers. That’s a difficult problem for the BLS to solve in the aftermath of funding and staffing cuts. The October shutdown left a crater of missing inflation data, which very well could be causing U.S. inflation to be under-reported. This will take time to fix. Meanwhile, the distrust grows.

Bonus Sahm coverage

Claudia Sahm was a guest last week on the “On Investing” podcast hosted by Schwab’s Kathy Jones and Liz Ann Sonders. She discussed the Fed’s balance sheet, the impact of AI on labor markets and touched on trust in economic statistics. Here is the podcast:

In closing

Yes, I have just returned from Australia, suffering from terminal jet-lag. Please excuse any typos and nonsensical sentences in this article. Readers are invited to be my editors, as always!

—————————

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Posted in Federal Reserve, Inflation, Investing in TIPS | Tagged economy, finance, inflation, investing, personal-finance, Treasury investments | 26 Comments

30-year TIPS auction gets real yield of 2.473%, second highest in 16 years

Posted on February 19, 2026 by Tipswatch

By David Enna, Tipswatch.com

The Treasury’s auction of $9 billion in a new 30-year Treasury Inflation-Protected Security — CUSIP 912810US5 — generated a real yield to maturity of 2.473%, the second-highest yield since the 30-year term was restarted in February 2010.

Demand appeared to be strong. The “when-issued” yield prediction released just before the close was 2.49%, so investor bids were strong enough to lower the real yield. The bid-to-cover ratio was 2.75, also an indication of strong demand.

The auction result set the coupon rate at 2.375%, matching a 16-year high.

Definition: The “real yield to maturity” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 2.473% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 2.473% for 30 years.

Overall, this looks like a great result for small-scale investors, especially those committed to holding for the full 30-year term. Here is the trend in the 30-year real yield over the last 2 years:

While real yields have dipped a bit in recent weeks, today’s real yield of 2.473% remains historically attractive. This is the first TIPS ever issued to mature in 2056.

Pricing

Because the coupon rate was set below the auction’s real yield, investors got this TIPS at a discounted price of 97.933562. In addition, this TIPS will carry an inflation index of 0.99991 on the settlement date of February 27. With that information, we can calculate the cost of an investment of $10,000 par value:

Par value: $10,000.
Principal at settlement date: $10,000 x 0.99991 =$9,999.10.
Cost of investment: $9,999.10 x 0.97933562 = $9,792.47
+ accrued interest of $7.72

In summary, an investor purchasing $10,000 par value of this TIPS will pay $9,792.47 on the settlement date for $9,999.10 of principal. (The principal is reduced because of slight deflation in the month of December.)

Inflation breakeven rate

At the exact time of the auction’s close I was asleep in northern Australia (15 hours ahead of EST), but two hours later the 30-year Treasury bond was trading with a nominal yield of 4.70%. We’ll go with that, creating a 30-year inflation breakeven rate of 2.23%, which seems reasonable. This means the TIPS will out-perform a 30-year bond if inflation averages more than 2.23% over the next 30 years.

Here is the trend in the 30-year inflation breakeven rate over the last two years, showing that this auction fell into the mid-range of inflation expectations:

Thoughts

This looks like a solid auction result for both small-scale investors and the Treasury. Demand appeared to be strong, but the real yield remained historically attractive.

It’s impossible to predict (or even troubling to think about) where both real and nominal yields could be heading for longer-term issues. The U.S. debt continues climbing, while at the same time confidence in the Federal Reserve and U.S. dollar is waning.

Real yields could plummet if the U.S. economy sinks and a future Federal Reserve reignites bond-buying quantitative easing. Or, real yields could continue rising. Impossible to say. This TIPS, however, will offer inflation protection for 30 years, along with an attractive coupon rate of 2.375% paid on inflation-adjusted principal.

For the right investor, this looks like a solid investment. Here is the auction history for this term over the last 10 years:

• Now is an ideal time to build a TIPS ladder

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

—————————

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Posted in Federal Reserve, Inflation, Investing in TIPS | Tagged investing, personal-finance, Treasury investments | 23 Comments

For the right investor, this week’s 30-year TIPS auction will have appeal

Posted on February 16, 2026 by Tipswatch

Update: 30-year TIPS auction gets real yield of 2.473%, second highest in 16 years

By David Enna, Tipswatch.com

The Treasury on Thursday will offer $9 billion in a new 30-year Treasury Inflation-Protected Security, CUSIP 912810US5. The real yield to maturity and coupon rate will be determined by the auction results, but it looks likely this TIPS will get an attractive real yield, possibly close to 2.5%.

The 30-year real yield has been sinking a bit through the month of February, down about 17 basis points since February 2. But the current Treasury estimate of 2.46% remains historically attractive. In the last 16 years, only one TIPS auction of this term — last year’s August reopening — has generated a real yield that high.

Definition: The “real yield to maturity” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 2.46% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 2.46% for 30 years.

Here is the trend in the 30-year real yield over the last 16 years, showing the massive move higher since the Federal Reserve ended quantitative easing in 2022 and began raising short-term interest rates. During that time, federal deficits have also increased substantially.

A ‘peculiar’ investment

Investors need to realize that any 30-year bond — even a Treasury issue — is going to be highly volatile, rising and falling with changes in market interest rates. My advice has always been to buy TIPS with the intention to hold to maturity. That’s even more important with a 30-year TIPS, which will see values swing mightily while also having somewhat limited appeal on the secondary market.

For example, a 30-year TIPS issued in February 2022 got an auctioned real yield of just 0.195%. Today, four years later, that TIPS is trading with a market price of about 55.05, meaning the investor has now lost nearly 45% of the original purchase price. I wouldn’t have recommended buying that Feb 2022 TIPS, but today’s version with a real yield of 2.46% looks a lot more attractive.

Of course, real yields could continue rising higher. That’s the risk. But an investor committed to holding to maturity will have principal growing with inflation for 30 years, plus a coupon rate of maybe 2.375% paid out each year on rising principal.

Pricing

This is a new TIPS, so an investor will pay less than par value on the auction’s settlement date of Feb. 27. The inflation index on that date will be 0.99991, meaning the investment price will be slightly discounted. In addition, the coupon rate will be set to the 1/8th percentage point below the auctioned real yield.

So … in conclusion … the cost of this TIPS will be a bit below par value.

Inflation breakeven rate

The 30-year Treasury bond closed Friday with an estimated nominal yield of 4.69%. If this new TIPS gets a real yield of 2.46%, the 30-year inflation breakeven rate would be 2.23%, which means the TIPS will outperform the bond if inflation averages more than 2.23% over the next 30 years.

That’s a fairly high breakeven rate, but consistent with recent trends. Inflation over the last 30 years, ending in January, has averaged 2.5%.

Here is the trend in the 30-year inflation breakeven rate over the last 16 years, showing the remarkably stable inflation expectations since 2021:

Thoughts

I think this TIPS is most appropriate for an investor with an expectation to live through the maturity date of Feb. 15, 2056. It would be an excellent addition, in my opinion, to a 30-year ladder of TIPS investments — for the person who can confidently hold to maturity.

Opinion: I like the idea of having principal growing with inflation, while also collecting a coupon rate of nearly 2.5% along the way. I recommend using a tax-deferred account because of the long years to the eventual payout of principal.

But I won’t be a buyer. My TIPS ladder, primarily in a tax-deffered account, extends to 2043 when I will be 90 years old. I might live longer, but probably not.

This TIPS auction closes Thursday at 1 p.m. EST. 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.

Because I am currently traveling in Australia — 14 1/2 hours ahead of EST at the moment — I can’t say when I will be able to post results of the auction , which will close around 3:30 a.m. Friday in central Australia. I am going to be late with the news, but you can find results on this page after the close.

Here are auction results for the 29- to 30-year term over the last seven years.