Thank You, Janet Yellen: New 10-Year TIPS Auctions With A Real Yield Of 0.436%

Summary

  • TIPS yields rose Wednesday after Fed Chair Yellen signaled more interest rate increases are coming.
  • Investors at today’s auction got a boost in yield, the highest in a year.
  • The 10-year inflation breakeven rate hit 2.044%, signaling that TIPS are no longer ‘cheap’ versus nominal Treasurys.

Read my full analysis on SeekingAlpha.com

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6 Responses to Thank You, Janet Yellen: New 10-Year TIPS Auctions With A Real Yield Of 0.436%

  1. Jimbo says:

    When a 5 year TIPS auctions with a yield around 0.5%, then I’ll be interested. I’ve got some 5 year TIPS that I purchased in December of 2014 that are yielding 0.395% (whoopty doo). Due to deflation, the principal plus interest are only up 1% per year. I get better than that in my savings accounts. By the way, you should thank the Donald, not Janet. If Hillary would have won, we’d be headed in the other direction. We’ll see how long the Trump Bump lasts before reality sets back in.

    • tipswatch says:

      Actually, Trump tried to talk down the dollar last week and it caused a small Treasury rally, lowering yields. Then Yellen caused the Wednesday bounce in Treasury yields and also got the dollar back up to previous levels.

      • ambrose bierce says:

        the turn up in yields is going to take some time, and on some authority it may never happen. at issue to me is what does a real yield of 1/2% cost you in terms of a premium to par at auction. the best TIP auction of 2016 was the 30 year, maybe the best TIP auction ever.

  2. joe says:

    I honestly don’t see yields rising as that will bankrupt this country with the $20 trillion of debt. Could you imagine if interest rates normalize to 5%? That would be $1 trillion of debt. That would bankrupt the country. They will pay off the debt thru inflation

    • tipswatch says:

      What you are describing would be great for TIPS … rising inflation but stable interest rates. I don’t think it will happen, though. Rates will have to rise if inflation rises.

      • joe says:

        I don’t think rates will necessarily have to rise with an increase in inflation; unless they are lying about the inflation rate per John Williams from shadowstats who claims inflation would be 5% if we used the 1980s measure of inflation. Not sure if this is true or not.

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