July Inflation: Bad News For TIPS, I Bonds And Social Security Benefits

Summary

  • Headline inflation rose 0.1% in July, missing the consensus forecast of 0.2% and continuing a trend of downside misses.
  • Non-seasonally adjusted CPI-U declined 0.07% in July, which will lower principal balances for TIPS in August and tamper the November 1 variable rate for the I Bond.
  • CPI-W, which is used to set Social Security benefits, also fell in July, which makes the Social Security Administration’s projection of a 2.2% benefits increase look faulty.

Read my full analysis on SeekingAlpha.com

In addition, I have updated my Inflation and I Bonds page with these new numbers.

And here are the new TIPS inflation indexes for September.

Advertisements
This entry was posted in Investing in TIPS. Bookmark the permalink.

2 Responses to July Inflation: Bad News For TIPS, I Bonds And Social Security Benefits

  1. Jimbo says:

    With this news and the 5 year TIPS having a current yield of 0.05%, it looks like I’ll be passing on this month’s auction. And, any iBond purchases this year. With 2 year CD’s available at 2%, I don’t much see the point right now.

    • tipswatch says:

      Yeah, I feel your pain. I have already bought half my I Bond allocation this year, and now I’ll have to decide on the other half, probably after Nov. 1. The 5-year TIPS will likely auction at about 0.10%; I’d rather have an I Bond at that yield.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s