This Week’s 5-Year TIPS Auction: Not Stellar, But Acceptable?

Summary

  • Above-inflation yields have declined sharply, but still remain “relatively” attractive compared to those of the last 10 years.
  • Five-year bank CDs yielding above 3% are a compelling alternative.
  • I Bonds with the current fixed rate of 0.5% are also more attractive, so buy I Bonds to the max before investing in this five-year TIPS.

As of today, with four days to go, CUSIP 9128286N5 looks likely to get a real yield to maturity of 0.52% and a coupon rate of 0.50%. If the auctioned real yield slips below 0.50%, the coupon rate will fall to 0.375%.

Read my full analysis on SeekingAlpha.com

About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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