Summary
- The trend is pointing toward a real yield to maturity of around 0.88%, down substantially from levels in November and December.
- The inflation breakeven rate is currently at 1.83%, a favorable number that should boost demand for this new TIPS from big-money investors.
- Think interest rates are heading lower? Then buy this TIPS. Otherwise, patience.
A few months ago, I had targeted this new 10-year TIPS as a purchase, in the hopes of a real yield and coupon rate of at least 1.00%. In “normal” times, a 10-year TIPS offers the sweet spot of a higher yield than shorter terms and a reasonable term to hold to maturity. It is the perfect term for building a ladder of bonds stretching 10 years into the future.
But ….
Read my full analysis on SeekingAlpha.com
Of course nothing is for sure, as David has said, the treasury could change the way they compute the fixed…