New 5-Year TIPS Gets An After-Inflation Yield Of 0.515%

Summary

  • Last April, a similar auction generated a real yield of 0.631% and a coupon rate of 0.625%, both better results than today’s.
  • The inflation breakeven rate came in at 1.86%, a fair number in today’s time of muted inflation.
  • A mild market reaction indicates this was a solid auction, and investors can be pleased by snagging a 0.50% coupon rate.

Read my full analysis on SeekingAlpha.com

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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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4 Responses to New 5-Year TIPS Gets An After-Inflation Yield Of 0.515%

  1. R. Caruso says:

    I have enjoyed reading your blog. Related to today’s post about the 5 year auction’s results, please note that the Treasury is adding a new 5 year TIPS auction in October. This is covered in the FAQs for TIPS on Treasury’s web site, although some other areas of the site have not been updated to reflect this. I assume the October auction is a new issue, with December’s re-opening being of that issue, but that is not specifically stated. Thank you again for your blog. R. Caruso

    • Tipswatch says:

      This is a fantastic tip, thanks. I have seen nothing about an additional 5-year TIPS auction, and it appears the Treasury is deleting a 30-year reopening. A few weeks ago, I had noticed a 5-year TIPS reopening in June on the schedule where a 30-year TIPS is usually scheduled. So now this is the new schedule, according to TreasuryDirect:

      ‘We auction 5-year TIPS in April, June, October, and December; 10-year TIPS in January, March, May, July, September, and November; and 30-year TIPS in February, and August.”

      So the question will be if the 5-year will just be reopened 3 times or if a new issue will drop in there in October. The Treasury’s tentative schedule only goes out to July.

  2. Crackers says:

    From the Treasury Direct web site:
    “Auction Frequency
    • The 5-year TIPS is auctioned as an original issue in April and October. The 5-year TIPS is auctioned as a reopening in June and December.”

  3. Tipswatch says:

    I have updated the Upcoming TIPS auction page with the new tentative schedule, which eliminates one 30-year TIPS reopening auction and adds one new 5-year TIPS auction. I will be writing about this soon.

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