- The new Treasury reality is negative real returns and stunningly low inflation expectations.
- The auction result of a real yield to maturity of -0.320% matched the Treasury’s overnight estimate.
- The inflation breakeven rate of 0.69% makes this TIPS – even with a negative real yield – much more desirable than a five-year nominal Treasury. But there are better alternatives.
Today’s Treasury auction of $17 billion in a new five-year Treasury Inflation-Protected Security – CUSIP 912828ZJ2 – reflected a new reality of ultra-low yields and grim inflation expectations.
Investors got a real yield to maturity of -0.320%, the lowest for any TIPS auction of this term in five years.