New 30-Year TIPS Auctions With A Real Yield Of 0.923%

Summary

  • The coupon rate was set at 0.875%, so buyers got it at a discounted price of about $98.76 for $100 of value.
  • The inflation breakeven rate came in at 2.13%, higher than recent auctions.
  • Market reaction to the auction looks mild, but did the yield come in higher than expected?

Read my full analysis at SeekingAlpha.com

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U.S. Inflation Rose 0.6% In January, Largest Increase In Four Years

Summary

  • Year-over-year inflation rose 2.5%, the highest number in nearly five years.
  • Gasoline prices rose sharply in January, but core inflation still rose 0.3% without gasoline. The Federal Reserve will take note.
  • The report is welcome news for holders of I Bonds and TIPS, reversing a flat inflation index over the last three months.

Real my full analysis at SeekingAlpha.com

Also, I have updated by ‘Tracking Inflation and I Bonds‘ page with these new numbers.

And here are the new March inflation indexes for all Treasury Inflation-Protected Securities.

Posted in Investing in TIPS | 3 Comments

This New 30-Year TIPS Might Not Be A Great Investment

Summary

  • A real yield around 0.91% won’t be enough justify an investment in a highly-volatile issue, even for most buy-and-traders.
  • If you’re older than 60, the 30-year term isn’t appealing as a buy-and-hold investment.
  • This TIPS is likely to be cash-flow negative in a taxable account.

The U.S. Treasury announced Thursday that it will auction $7 billion in a new 30-year Treasury Inflation Protected Security (CUSIP 912810RW0) on Thursday, February 16. I haven’t been a fan of the 30-year TIPS maturity for several years, especially when after-inflation yields are well below the 2% benchmark typical in such a long-term investment.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | 1 Comment

Here’s Why An I Bond With A Fixed Rate Of 0.0% May Outperform Your Short-Term TIPS Fund

Summary

  • Short-term TIPS have real yields negative to inflation.
  • An I Bond with a fixed rate of 0.0% will match inflation and provide a better return than a short-term TIPS.
  • For a short-term TIPS fund to outperform, real yields will have to fall deeper into the negative range, which seems unlikely.

I suggesting that you take a look at an alternative to short-term TIPS funds: U.S. Series I Savings Bonds.

Read my full analysis on SeekingAlpha.com

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FRNs: Is It Time To Take A Look At Treasury Floating Rate Notes?

Summary

  • FRNs are getting more intriguing as interest rates rise from near-zero levels.
  • They offer protection against rising interest rates, but not rising inflation. That makes FRNs a good complement to TIPS and I Bonds.
  • But are they a good idea for a small investor? Will you do better with a 2-year bank CD?

Read my full analysis at SeekingAlpha.com

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Thank You, Janet Yellen: New 10-Year TIPS Auctions With A Real Yield Of 0.436%

Summary

  • TIPS yields rose Wednesday after Fed Chair Yellen signaled more interest rate increases are coming.
  • Investors at today’s auction got a boost in yield, the highest in a year.
  • The 10-year inflation breakeven rate hit 2.044%, signaling that TIPS are no longer ‘cheap’ versus nominal Treasurys.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | 5 Comments

U.S. Inflation Rose 0.3% In December; Up 2.1% Over Last 12 Months

Summary

  • News is not good for I Bond investors: Inflation is flat over first three months of rate-setting period.
  • Year-over-year ‘headline’ inflation broke through the 2.0% barrier for the first time since June 2014.
  • Core inflation rose 2.2% in 2016, above the Federal Reserve’s target of 2.0%.

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 CPI Indexes for TIPS in February.

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