- The Treasury will offer a new 10-year TIPS at auction Thursday. Real yields are currently running at about 0.09%.
- TIPS have had a great run over the last year, but wasn’t the time to buy a year ago?
- The current inflation breakeven rate of 1.75% is reasonable, but inflation expectations have been rising, making TIPS more expensive versus nominal Treasurys.
The U.S. Treasury will offer $14 billion in a new 10-year Treasury Inflation-Protected Security at auction Thursday. This is CUSIP 912828Z37, and the coupon rate and real yield to maturity will be determined by the auction.
I’m not likely to be a buyer, even though 10-year issues are the “sweet spot” of TIPS investing, usually offering the optimal above-inflation yield versus length of term. But right now real yields on TIPS – across all maturities – are too low to make them attractive.