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

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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