- The real yield on a 10-year TIPS has risen 29 basis points in recent weeks.
- At the same time, the inflation breakeven rate has declined – slightly.
- The driving force? A rise in nominal rates, which will nearly always pull the TIPS yield higher.
Agree with what you have to say. I’ve been buying 30 year tips at auction when the real yields are higher and sold when they drop over the past few years. There has been a few bucks to be made on this strategy. Worst comes to worst I would just hold for 30 years.
The 30 year real yield tips is over 1% now. Last year we had 2% inflation. The 10 year tips is at .6% and the Andrews federal 7 year cd is now 2.2%. TIPS are starting to get interesting. It’ll be interesting to see if there will be a rate hike, because if there is not maybe the TIPS can become a better deal than cd’s.
I’d definitely like to see the 10-year TIPS get up to 1.00%. That might take awhile, even with this rate increase. I’ve been using a mix of CDs, TIPS and I Bonds as my super-safe allocation. All of them have been very boring for six years.