5-Year TIPS Reopening Gets Real Yield Of Only 0.02%

Summary

  • This was the lowest real yield for a 4- to 5-year TIPS auction since April 2017, when a new TIPS got a real yield of -0.049%.
  • The inflation breakeven rate was 1.69%, a reasonable number that was higher than the originating auction’s 1.50%. Inflation expectations are rising.
  • As the 5-year TIPS real yield dips perilously close to negative, investors seeking safety should look for better alternatives: I Bonds or insured bank CDs.

The U.S. Treasury announced Thursday that its $15 billion reopening auction of a 5-year TIPS, CUSIP 912828YL8, generated a real yield to maturity of 0.020%, the lowest for this auction term since April 2017.

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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