I will be traveling Thursday and so I won’t be able to post any before- or after-thoughts on Thursday’s reopening of CUSIP 912828C99, creating a 4-Year 8-Month Treasury Inflation-Protected Security with a coupon rate of 0.125%.

So let’s take a look at where we stand at 6:05 p.m. Wednesday:

• This TIPS was trading today with a yield to maturity of -0.29%, according to Bloomberg’s Current Yields chart. This is up about 12 basis point from where it was last week.
• The Wall Street Journal’s Closing Prices chart shows that this TIPS maturing April 2019 closed with a yield of -0.308% and a price of about $102 for $100 of value (because of the the coupon rate of 0.125%).
• The Treasury’s Real Yield Curve chart estimates a full 5-year TIPS would yield -0.18%. This estimate isn’t directly comparable with the two quotes above, since a full-term TIPS would yield slightly more than a TIPS with 4-month-shorter term.

So, conditions have improved since I wrote about this auction last week. Last Thursday, the market was signaling a yield of about -0.41% and now -0.29% looks more likely.

With the 5-year nominal Treasury trading today at 1.65%, you’re looking at an inflation breakeven rate of 1.94% for this TIPS. I’d probably take that bet if I were thinking about buying a 5-year Treasury, but maybe not against a 5-year bank CD paying 2.30%, which pushes the breakeven point up to 2.59%.

Honestly, I’m not in the market to buy any of these at the moment. I mean, could interest rates be rising next year? …

Did the Fed give a signal today?

The Wall Street Journal’s Website lead story right now has this headline: ‘Fed Minutes: Rate-Hike Debate Heating Up.’ An excerpt:

Federal Reserve officials debated at their July meeting whether to move sooner than expected to start raising interest rates in light of an improving job market and rising inflation, but decided they needed more evidence before concluding that was the right approach.

The minutes of the meeting, released Wednesday, provide fresh evidence of an intensifying debate inside the central bank about when to respond to a surprisingly swift descent in the unemployment rate and rising consumer prices.

You can read the Fed’s full minutes here. There’s a giant section with the heading: Monetary Policy Normalization, which I can assure you has not appeared in any Fed minutes over the last couple of years. It includes this paragraph:

Meeting participants continued their discussion of issues associated with the eventual normalization of the stance and conduct of monetary policy, consistent with the Committee’s intention to provide additional information to the public later this year, well before most participants anticipate the first steps in reducing policy accommodation to become appropriate.

In other words, the Fed is saying: ‘More to come. Just wait patiently.’ But in fact, the Federal Reserve just signaled that there is more to come, and a reason to wait patiently.

For the Fed, that is a pretty big step.