The results are in for the 5-year Treasury Inflation-Protected Security auctioned April 21, 2011. The CUSIP is 912828QD5.

As expected, the 5-year TIPS carries a coupon rate of 0.125%. But because of high demand, bidders are paying $101.75 for $100 of this security. That results in a yield of negative 0.18%. (However, in addition to the base yield, investors in TIPS see their principal grow at the rate of inflation until maturity. This one matures April 15, 2016.)

That yield of -0.18% was a little better than I expected. Since I was a buyer of this TIPS, I wanted that negative yield as close to zero as possible. A few days ago it looked like -0.2% to -0.3% might be possible.

This works out well if …

Right now the regular 5-year Treasury is paying 2.13%. The 5-year TIPS auctioned today will do better than that if inflation averages more than 2.31% over the next five years.

So 2.31% is the breakeven rate. Since the TIPS offers protection against inflation, my opinion is that it is a better investment than the 5-year Treasury, or any five-year CD you can find out there. Not great, just a little better.