Avoid This Week’s 10-Year TIPS Reopening

Summary

  • The real yield to maturity looks likely to come in at around 0.22%, well below the yields of 10 months ago.
  • The inflation breakeven rate is currently running at 1.68%, a low number that should draw interest in this TIPS from big-month investors.
  • For a small-scale investor, the U.S. Series I Savings Bond offers a better yield and better terms. But make your purchases before November 1.

The U.S. Treasury announced last week it will auction $12 billion of a reopened CUSIP 9128287D6 Thursday, creating a 9-year, 10-month Treasury Inflation-Protected Security.

Although TIPS traders may be eyeing this issue as a potential money maker, I’m going straight to the point: Avoid it.

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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