Up next: 10-year TIPS will reopen at auction on May 19

The US Treasury announced this morning that it will reopen CUSIP 912828N71 at auction on May 19, creating a 9-year, 8-month Treasury Inflation-Protected Security.

This TIPS originally auctioned on January 21 with a coupon rate of 0.625% and a real yield (after inflation) to maturity of 0.725%. But now, four months later, the TIPS market has taken a dismal turn for new investments:

  • The real yield to maturity could be as low as 0.10%, down more than 60 basis points since January.
  • Buyers are going to pay a premium, as much as 4.5% above par value.
  • For small investors, I Bonds are clearly the superior inflation-protected investment.

Read my full analysis at SeekingAlpha.com

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