This Week’s 5-Year TIPS Auction Is A ‘Screaming Buy’

Summary

The real yield could be about 1.12%, the highest after-inflation yield in nearly 10 years of 4- to 5-year TIPS auctions.
The real yield curve has inverted, with the 5-year TIPS now yielding about 6 basis points more than a 10-year TIPS.
The inflation breakeven rate is currently a very reasonable 1.60%, making this TIPS desirable versus a nominal 5-year Treasury, and still competitive with best-in-nation bank CDs offering 3.5%.