10-Year TIPS Reopens At Auction With A Real Yield Of 0.450%

Summary

  • The after-inflation yield of 0.450% was 20 basis points higher than where 10-year TIPS were trading on September 8.
  • Today’s investors benefited from the Federal Reserve’s announced intention Wednesday to unwind its bond portfolio and continue gradually increasing short-term rates.
  • The inflation breakeven rate of 1.82% is in the mid-range of recent results, but continues to indicate muted inflation expectations.

Read my full analysis on SeekingAlpha.com

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10-Year TIPS Will Reopen Thursday, Here’s What To Expect

Summary

  • The current real yield of 0.34% would fall below results for the last five 9- to 10-year TIPS auctions.
  • At that yield, investors would have to pay a slight premium to par value.
  • The current inflation breakeven rate of 1.86% is solidly in the neutral range. This TIPS isn’t cheap versus a nominal Treasury.

Read my full analysis on SeekingAlpha.com

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August Inflation: Better News For TIPS, I Bonds And Social Security Benefits

Summary

  • CPI-U increased 0.4% in August, an upside surprise that broke a string of smaller-than-expected numbers.
  • Non-seasonally adjusted inflation increased 0.3%, which will boost TIPS principal balances in October and brings the I Bond’s future variable rate up to 1.4%, with one month remaining.
  • Social Security benefits at this point would increase 1.7% in January, but there is one month remaining to complete the calculation. The July prediction of a 2.2% increase is still looking unlikely.

Read my full analysis on SeekingAlpha.com

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

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

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5-Year TIPS Reopening Auctions With A Real Yield Of 0.117%

Summary

  • The after-inflation yield for CUSIP 912828X39 came in right at the expected number, rising 12 basis points since the originating auction on April 20.
  • The inflation breakeven rate was 1.66%, which is attractive when measured against nominal Treasurys.
  • This TIPS will have one more reopening auction in December. That one will be worth watching.

Read my full analysis on SeekingAlpha.com

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5-Year TIPS Will Reopen August 24; Is It Worth A Look?

Summary

  • The after-inflation yield is currently running at 0.11%, up from -0.049% at the originating auction in April.
  • The inflation breakeven rate is 1.61%, making this TIPS attractive versus a nominal Treasury.
  • Key question: Are there better, equally safe shorter-term investments you should consider?

Read my full analysis on SeekingAlpha.com

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July Inflation: Bad News For TIPS, I Bonds And Social Security Benefits

Summary

  • Headline inflation rose 0.1% in July, missing the consensus forecast of 0.2% and continuing a trend of downside misses.
  • Non-seasonally adjusted CPI-U declined 0.07% in July, which will lower principal balances for TIPS in August and tamper the November 1 variable rate for the I Bond.
  • CPI-W, which is used to set Social Security benefits, also fell in July, which makes the Social Security Administration’s projection of a 2.2% benefits increase look faulty.

Read my full analysis on SeekingAlpha.com

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

And here are the new TIPS inflation indexes for September.

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Why Would Anyone Buy Inflation-Protected Investments?

Summary

  • The idea: Push inflation-protected money into the future, when you will need it in retirement.
  • Both I Bonds and TIPS are super safe investments that can be purchased with zero commissions and fees.
  • The only risk in purchasing ‘inflation protection’ is that you will receive a slightly lower return than with nominal investments. The cost is very low.

After getting together with friends from my college days, I suddenly had a moment when I realized that most people – maybe 95% of Americans – have no idea what inflation-protected investments are or how they could fit into a portfolio.

Read my full analysis on SeekingAlpha.com

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