Treasury Inflation-Protected Securities

10-year TIPS auction gets real yield of 2.438%, a great result for investors

Posted on July 23, 2026 by Tipswatch

By David Enna, Tipswatch.com

The Treasury’s auction today of a new 10-year Treasury Inflation-Protected Security, CUSIP 91282CRE3, generated a real yield to maturity of 2.438%, the highest at auction for this term since October 2008.

Investor demand appeared to be weak. The bid-to-cover ratio was a lukewarm 2.30 and the “when-issued” prediction used by bond traders was for a real yield of 2.41%. The higher auction result indicates weak demand.

But for investors … this was an excellent auction. Earlier Thursday, a similar TIPS was trading on the secondary market with a real yield of 2.38%. That rose to 2.41% as tensions continued building in the Mideast. The auction result of 2.438% indicates tensions continue, as indicated by sharp declines in both stocks and bonds today.

Definition: The “real yield to maturity” of a TIPS is its yield above future U.S. inflation, over the term of the TIPS. So a real yield of 2.438% means an investment in this TIPS would provide a return that exceeds official U.S. inflation by 2.438% for 10 years.

Global tensions, along with massive debt-issuance needs by the U.S. government and AI-building corporations, have been pushing both nominal and real yields higher in recent weeks. Both the 20-year and 30-year TIPS are inching toward 3% real yields today.

CUSIP 91282CRE3 gets a coupon rate of 2.375%, the highest for this term since a 10-year auction on July 12, 2007, with a coupon rate of 2.625%.

Here is the year-to-date trend in the 10-year real yield. Notice the sharp upward path (and also that data for this chart ended on Tuesday, below today’s auction result):

Pricing

Because the coupon rate (2.375%) was set below the auctioned real yield (2.438%), this TIPS sold at a discounted unadjusted price of 99.444895. In addition, it will carry an inflation index of 1.00325 on the settlement date of July 31. With that information, we can calculate the cost of a $10,000 par value investment at this auction:

Par value: $10,000.
Principal purchased on settlement date: $10,000 x 1.00325 = $10,032.50
Cost of investment: $10,032.50 x 0.99444895 = $9,976.81.
+ Accrued interest of $10.36.

In summary, an investor paid $9,976.81 for $10,032.50 on the settlement date, and from that point forward will earn accruals matching future inflation plus an annual coupon rate of 2.375%. The accrued interest will be returned at the first coupon payment on Jan. 15.

Inflation breakeven rate

At the auction’s close, the nominal 10-year Treasury note was trading with a yield of 4.70%, giving this TIPS an inflation breakeven rate of 2.26%, lower than the most recent auctions of this term. This means the TIPS will out-perform the nominal Treasury if inflation averages more than 2.26% over the next 10 years. Over the last 10 years, ending in June, inflation has averaged 3.3%.

Here is the year-to-date trend in the 10-year inflation breakeven rate, showing a surprising trend lower even amid the pressures of war and oil-supply disruptions:

Thoughts

One factor to remember is that this new TIPS is going to get hit with a principal decline of 0.35% in the month of August, based on the decline in June’s non-seasonally adjusted inflation. We can be sure that was factored into today’s auction. However, that trend could quickly reverse in future months if oil prices keep climbing, an inflationary effect that could spread across the economy.

Overall, I’d say this auction was extremely positive for investors. Yes, real yields could continue climbing higher. But a hold-to-maturity investor is assured of outpacing inflation by 2.438% over the next 10 years. That is very attractive for this term.

This TIPS will have reopening auctions on Sept. 17 and again in November, with the date not yet set. Here are auction results for the 9- to 10-year term over the last four 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

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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 Inflation, Investing in TIPS, TreasuryDirect | Tagged economy, investing, personal-finance, stocks, Treasury investments | 6 Comments

Coming this week: An attractive new 10-year TIPS

Posted on July 19, 2026 by Tipswatch

By David Enna, Tipswatch.com

The Treasury on Thursday will offer $21 billion in a new 10-year Treasury Inflation-Protected Security, CUSIP 91282CRE3. There’s a good chance this auction will generate the highest real yield to maturity for this term in nearly 18 years.

The real yield and coupon rate will be determined by the auction results. But U.S. Treasury estimates placed the likely real yield at 2.31% at Friday’s market close. The most recent TIPS of this term, issued in January, closed Friday at 2.29%.

Things will change by Thursday, but it’s clear that CUSIP 91282CRE3 will get an attractive result, historically speaking. It looks likely to place 2nd on the chart at right, under the remarkable 2.85% real yield recorded on Oct. 8, 2008, in the midst of a massive market sell-off caused by the 2008 financial crisis.

Definition: The “real yield to maturity” of a TIPS is its yield above future U.S. inflation, over the term of the TIPS. So a real yield of 2.31% means an investment in this TIPS would provide a return that exceeds official U.S. inflation by 2.31% for 10 years.

As I noted, market conditions are likely to change by the Thursday auction. The 10-year real yield dipped 4 basis points on Friday, possibly because of a flight to safety in reaction to stock market jitters. But a real yield around 2.30% seems likely. You can track the current Treasury estimate on this page after each market close.

Here is the trend in the 10-year real yield going back to the financial crisis of 2008, showing that today’s real yields are hitting multi-year highs, minus any overt financial crisis:

Pricing

Because this is a new TIPS, the coupon rate will be set at the one-eighth percentage point below the auctioned real yield. So if the real yield turns out to be 2.31%, the Treasury will set the coupon rate at 2.25%. This would be the highest coupon rate for any new 10-year TIPS since July 2007 at 2.625%.

Because the coupon rate will be lower than the real yield, the unadjusted price is going to slightly discounted. In addition, this TIPS will carry an inflation index of 1.00325 on the settlement date of July 31. In the end, the investment cost should be slightly less than par value.

Inflation breakeven rate

With the nominal 10-year Treasury note closing Friday at 4.55%, this TIPS currently has an implied inflation breakeven rate of about 2.24%, which seems entirely reasonable. That’s 26 basis points lower than the 2.50% high hit on May 4, when Brent crude prices had soared to $115. Crude prices are now down to about $88, but there is a lot of inflationary risk, possibly long-term risk.

Fixed-income investors: Do you think inflation will average more than 2.24% over the next 10 years. If “yes,” buy the TIPS. If “no,” buy the nominal Treasury.

Here is the trend in the 10-year inflation breakeven rate over the last 18 years:

In this chart, note the deep declines in inflation expectations in the two recessionary periods. It’s interesting that the breakeven rate doesn’t plunge until the recession is under way. Also, note that the breakeven rate is a lousy predictor of future inflation.

Also … I’d say the early months of a recession are a good time for traders to buy TIPS to try to catch the initial spike in yields as financial assets sell off, and then trade out when yields plummet. This isn’t my strategy, of course.

Thoughts

A chance to get the highest real yield at auction in nearly 18 years is appealing, and tempting. But I won’t be a buyer Thursday. I filled the 2036 rung of my TIPS ladder with a purchase at the January auction, getting a real yield of 1.940% — good but probably well below Thursday’s result.

There are economic forces, such as lower international purchasing and soaring U.S. debt loads, that could cause real yields to continue to climb. But a real yield in the 2.3% range over 10 years remains very attractive, especially if held to maturity. This is a new TIPS, so there is no secondary market alternative (yet) that will mature in in the second half of 2036.

If you are looking to invest, keep an eye on the Treasury’s real yield estimates, posted at the end of each market day. That’s a good indicator.

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

I will be posting the auction results soon after the close on Thursday. Here is a history of auction results for this term over the last 5 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

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

Posted in Inflation, Investing in TIPS, TreasuryDirect | Tagged investing, personal-finance, Treasury investments | 22 Comments

Disinflation triggers in June, but for how long?

Posted on July 14, 2026 by Tipswatch

All-items inflation fell 0.4% for the month; annual rates also dipped.

By David Enna, Tipswatch.com

U.S. inflation fell in June at a rate much deeper than expected, a big surprise. But current events in Iran make this dip look “transitory,” an over-used word that seems appropriate today.

In June, the Consumer Price Index decreased 0.4% on a seasonally adjusted basis after rising 0.5% in May, the Bureau of Labor Statistics reported this morning. This was the largest 1-month drop since April 2020. Annual all-items inflation fell to 3.5%, well down from the 4.2% reported for May.

Core inflation, which removes food and energy, was flat for the month and the annual rate fell from 2.9% in May to 2.6% in June.

All these results were well below economist expectations, so the June report should be viewed as highly positive. But events of the last week — with the Strait of Hormuz again closed and U.S. launching nightly attacks on Iran — make the situation highly volatile.

A key factor in the June report, of course, was a 9.7% drop in gasoline prices, which remain up 26.7% year-over-year. The energy index was the largest contributor to the monthly all items decrease, the BLS said. This deflationary trend is highly likely to reverse in July and August. More from the report:

Food at home costs rose 0.2% in June and are up 2.7% for the year.
The meats, poultry, fish, and eggs index increased 0.6% over the month.
The cost of eggs increased 4.3%.
Costs for fruits and vegetables fell 0.2%.
Shelter costs increased just 0.1%, but are up 3.3% for the year.
Apparel costs fell 0.6% but are up 3.9% for the year.
Costs of new vehicles were flat and are up only 0.5% for the year.
Prices for used vehicles fell 0.2% and are down 1.8% for the year.
The motor vehicle insurance index declined 2.0% in June after falling 1.7% in May.
Airline fares rose 0.2% but were up 26.5% for the year.

Most of this looks routine, except for the deep decline in gas and energy prices. That may end up being a one-month story. However, the slowing of shelter inflation and drop in annual core inflation have to be viewed as positives. Here is the trend in all-items and core inflation over the last year:

What this means for TIPS and I Bonds

Investors in Treasury Inflation-Protected Securities and Series I Savings Bonds 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. For June, the BLS set the inflation index at 333.952, a drop of 0.35% from the May number.

For TIPS. The June report means that principal balances for TIPS will fall by 0.35% in August, after rising 0.63% in June. Here are the new August Inflation Indexes for all TIPS.

For I Bonds. The June report is the third of a six-month string that will determine the I Bond’s new variable rate, to be reset November 1. So far, inflation has increased 1.13% over the three months, which translates to a variable rate of 2.26%. But three months remain. Expect lots of volatility. Here are the numbers so far:

View historic data on my Inflation and I Bonds page.

What this means for future interest rates

If we could ignore the inflationary events of the last week, I’d say this June report would — at the least — allow the Federal Reserve to put future short-term rate increases on hold. But keep in mind that both all-items (3.5%) and core inflation (2.6%) remain too high for comfort.

If the situation in Iran continues to escalate, we will see higher gas prices, possibly steadily higher as the summer months continue. Higher gas prices obviously trigger higher immediate inflation, but also cause other consumer spending to decline. Fed actions on short-term interest rates will have little effect on that.

Today’s report led investors to sharply lower the chances that the Federal Reserve will raise rates at its July 28-29 meeting, the Wall Street Journal reported. Before the report, futures markets implied there was a close to 40% chance of a rate increase. That dropped to about 15% this morning.

I agree the Fed is again on hold until this situation clarifies (if it ever clarifies). Fed Chairman Kevin Warsh, in remarks prepared for House testimony this morning, had this to say:

“The members of our committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability. … If we get policy right — and we will — the inflation surge of the last five years will be a thing of the past.”

Later, during testimony, Warsh was asked if the June inflation report changed his view on future inflation. He said:

“I don’t want to over-read or cherry-pick data. There might be some that look at this morning’s data and say, ‘Oh, mission accomplished. Everything is swell.’ That is not my view.”

This is encouraging and would indicate the Fed will at least consider hiking rates if inflation continues rising. This is from Bloomberg’s morning report:

“The weaker inflation data likely keeps the Fed on hold for now and reduces any rate hike odds, but we remind investors that almost every communication that has emanated from Chair Warsh during his short tenure so far has been hawkish,” said Skyler Weinand at Regan Capital.

“Although a path remains for rates to stay unchanged this year, the re-escalation of the conflict has narrowed it,” he said.

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Posted in Federal Reserve, I Bond, Inflation, Investing in TIPS, Savings Bond | Tagged investing, personal-finance, Treasury investments | 30 Comments

A restaurant menu demonstrates the frightening power of inflation

Posted on July 12, 2026 by Tipswatch

The Open Kitchen restaurant opened in 1952 on West Morehead Street in Charlotte.

By David Enna, Tipswatch.com

Ever since COVID isolation changed our lives, my wife and I rarely eat out anymore. That leaves a six-year gap in our “restaurant awareness” and now every time we go out for breakfast, lunch, or dinner, we suffer sticker shock. These prices are crazy!

Over the years, as part of my inflation-watching duties, I have been following prices at one of my favorite “comfort food” restaurants in Charlotte, The World Famous Open Kitchen, operating since 1952 at the same location about mile and half from our home.

The restaurant was founded by Steve Kokenes, who was Greek, not Italian. His menu of pizza, lasagna, spaghetti and other “international” cuisine was a rarity for Charlotte in those days. The city didn’t get an “authentic” Italian restaurant – run by actual Italians – until the late 1980s. But that didn’t matter, the Open Kitchen specialized in simple, tasty comfort food and it prospered.

Its location — once a dreary area of warehouses and factories — is now a booming area of modern apartments, art galleries, trendy breweries and “artisan” restaurants, very close to Bank of America Stadium. It’s now a very valuable piece of property.

The restaurant is still run by members of the Kokenes family, who wait tables and run the cash register. And they have a remarkable collection of Charlotte memorabilia displayed all over the walls.

What really caught my attention on a past visit was a 1963 menu posted by the entrance. It’s especially interesting since today’s menu contains many of the same items – with exactly the same names – 63 years later. Aha! This offers a unique look into inflation over the last 63 years, and … what could be in store for our future.

Inflation is a thing

Back in 1963, $1 was worth one dollar. And that is still true today. But adjusted for inflation (based on the Bureau of Labor Statistics’ Inflation Calculator) it takes $10.99 in today’s dollars to equal the buying power of $1 in May 1963. That is an increase of 999%, and it is my baseline for comparisons of price changes from 1963 to today.

In this chart I have included data on important areas of the U.S. economy in the last 63 years. Gas prices, for example, have increased 1,420%, higher than inflation. Median home prices are up 2,140%, double the rate of U.S. inflation — which explains a lot about why housing is unaffordable.

If you were invested in the U.S. stock market, however, you did extremely well. The Dow Jones Industrial Average has increased at a rate 7 times the rate of inflation. Again, this tells you something about our long-running and seemingly never-ending bull market.

At the same time, the U.S. minimum wage at $7.25 has lagged well behind inflation. It is more or less meaningless today .

The Open Kitchen: Then, and now

Let’s look at Food Away From Home, a U.S. price index that has increased 1,345.9% over the last 63 years. Since my last price check in 2021, it is up 29.2%. This is a key variable for judging restaurant prices.

Today’s Open Kitchen menu prices are mostly higher than overall inflation (999%) but pretty much in line – with some variations – with food-away-from-home inflation (1,346%) over the last 63 years.

For example, Spaghetti with Meat Balls and Mushrooms (one of my favorite Open Kitchen offerings) costs $19.75 today versus $1.50 in 1963, a 1,217% increase — higher than overall inflation but lower than the food-away-from-home index.

Spaghetti with Chicken Livers is a fantastic bargain at $16.75, but … er … who is ordering that?

My pre-COVID memories of Open Kitchen prices generally fall around $10 to $13 for the pasta dishes (which are very good). That was the range still found in 2021. Five years later, prices are up about 40% for most items, higher than food-away-from-home inflation during that time.

A key thing to note is that Open Kitchen’s higher prices generally involve dishes with meat or sausage, where prices have skyrocketed in recent years, up about 55% during that time — well above general food-away-from-home inflation at 29.2%. (Don’t order that extra meatball!).

When my wife and I go to Open Kitchen, we generally order a large Greek salad ($12.75) and a pasta dish with either meatball or sausage ($15.50) and then we split both items. A half-liter carafe of Chianti goes for $9, a very good deal. Overall, this is comfort food at a reasonable price.

Inflation is a real danger

Yes, I was alive in 1963 but I wasn’t driving or paying for meals. My biggest expense might have been 25-cent Saturday movie matinees. I saw “Jason and the Argonauts” at least five times. Today’s price: About $12 for kids, up 4,700%. (Are today’s movies better?)

Inflation is an unrelenting force. When you take a very long view of prices, you can see how even moderate inflation is devastating to purchasing power. Inflation rose 999% over the last 63 years, and 24.5% over the last five years (an annual rate of 4.5%). It stands today at 4.2%.

Think about it: Our dollars have lost at least one-fifth of their buying power in just five years.

Even a very reasonably priced restaurant like the Open Kitchen is starting to look pricey, at least by its past standards. And then add in the expected 20% tip, up from 15% in the past, and Charlotte’s 9.25% sales tax on prepared meals (up from 3% in 1963).

Is it worth it? Yes, at least for the comfort and tradition of a restaurant like the Open Kitchen. Here’s a 2025 video history of the restaurant, where you can easily see the appeal:

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Posted in Inflation, Retirement | Tagged economy, finance, investing | 45 Comments

A 10-year TIPS is maturing July 15. How did it do as an investment?

Posted on July 5, 2026 by Tipswatch

A multi-year surge in inflation made CUSIP 912828S50 a winner.

By David Enna, Tipswatch.com

The summer of 2016 was a dark time for investors in Treasury Inflation-Protected Securities. By June of that year, 5-year real yields had gone deeply negative and in early July, 10-year real yields briefly dipped to -0.06% on July 8, 2016.

That set up very unpromising auction of a new 10-year TIPS on July 21, 2016, generating a real yield to maturity of just 0.045%, the lowest in more than three years. This was CUSIP 912828S50. The coupon rate was set at 0.125%, the lowest the Treasury will go on a TIPS.

The auction drew fairly strong demand, despite the very low real yield. Why? Because on that day a 10-year Treasury note was trading with a nominal yield of 1.59%, setting up an attractive inflation breakeven rate of 1.54%. That meant the TIPS would out-perform if inflation surpassed 1.54% over the next 10 years.

As it turned out, inflation has averaged 3.4% (rounded) over the last 10 years, making the TIPS a much stronger investment than the nominal Treasury, earning 1.86% more a year over 10 years. We know the final investment results for CUSIP 912828S50 because the May inflation report set its final inflation index for the July 15 maturity: 1.39327.

The TIPS generated a nominal annual return of 3.381% — in essence matching inflation over the 10 years. The Treasury note’s yield of 1.59% severely lagged inflation. For its moment in time, CUSIP 912828S50 was a very good fixed-income investment.

Simple lesson: A TIPS will out-perform when inflation rises to unexpected levels, as it has done over the last 10 years. The results for CUSIP 912828S50 continue a multi-year trend of TIPS benefiting from unexpectedly high inflation.

Click on image for larger version. See more data here.

TIPS vs. an I Bond

An I Bond issued in July 2016 had a fixed rate of 0.10%, a slightly better return than CUSIP 912828S50’s real yield of 0.045%. Data from Eyebonds.info show that the I Bond has had an annual nominal return of 3.24% through June 2026, slightly less than the TIPS.

This result is a bit misleading because the I Bond on July 1 had just completed a composite rate of 3.22% and was transitioning to 3.44% for six months. And these results don’t yet reflect the surge in inflation in April and May 2026. In the end, the I Bond will slightly outperform the TIPS.

TIPS versus other alternatives

The total bond market, represented by Vanguard’s Total Bond ETF (BND) has had an average annual return of 1.47% over the last 10 years, trailing both the July 2016 TIPS and the I Bond.

The TIP ETF, which hold all maturities of TIPS, has had an annual total return of 2.32%, also trailing the TIPS and I Bond.

Vanguard’s short-term TIPS fund, VTIP, has had a annual total return of 3.02%, but still slightly trails the TIPS and I Bond.

Thoughts

Despite the gloom of investing in TIPS in the summer of 2016, those investments turned out to be relatively attractive for one reason: A strong surge higher in U.S. inflation, which continues today. Inflation protection brings value to your portfolio.

• 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

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