This Week’s 5-Year TIPS Auction Looks Mildly Interesting

Summary

  • At Friday’s close, the Treasury’s estimate of the real yield of a five-year TIPS stood at 0.25%, a bit higher than recent numbers.
  • At that yield, the five-year inflation break-even rate would come in at 1.34%, an extremely low number.
  • I expect reasonably strong demand for this new issue, but smaller-scale investors can find a better alternative with I Bonds, or possibly insured bank CDs.

The U.S. Treasury on Thursday will auction $17 billion in a new five-year Treasury Inflation-Protected Security – CUSIP 912828YL8. The real yield to maturity and resulting coupon rate will be set by the auction bidding.

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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