- The real yield is likely to come in around 0.57%, well below the coupon rate of 0.875%.
- That means buyers could be paying a premium of nearly 3% to capture that coupon rate. Is that too high a price to pay?
- The inflation breakeven rate is currently running at about 1.82%, meaning this TIPS is close to fair value versus a nominal Treasury.
The U.S. Treasury announced last week that it will offer $11 billion in a reopening auction Thursday of CUSIP 9128285W6, creating a 9-year, 8-month Treasury Inflation-Protected Security.