As 5-Year TIPS Auction Approaches, Real Yields Are On The Move

Summary

  • A new 5-year Treasury Inflation-Protected Security — CUSIP 912828ZJ2 — will be created at auction Thursday.
  • This TIPS looks likely to get a real yield to maturity in the range of -0.20% to -0.30%, but a firm prediction is impossible.
  • Reaction? It’s not an ugly investment idea, but I Bonds are clearly the better investment for your first $10,000.

This new 5-year TIPS should attract some investor interest, despite deflationary fears in the short term. A massive explosion of Federal Reserve stimulus and U.S. government deficit spending is being used to stabilize the financial system, and at least so far, it is working. The S&P 500 index is up about 22% since hitting a low of about 2,235 on March 23.

Read my full analysis on SeekingAlpha.com

5-year auction history

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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