Summary
- There have been 104 auctions of this 9- to 10-year term since 1997 and today’s result was a record low yield, by a large margin.
- The inflation breakeven rate came in at 1.52%, a reasonable number but higher than recent trends. Inflation expectations are slowly rising.
- Reaction to the auction looked mixed, with TIPS yields rising slightly after the auction’s close at 1 p.m. EDT.
The U.S. Treasury just completed its auction of $14 billion in a new 10-year Treasury Inflation-Protected Security, with a historic result: A real yield to maturity of -0.93%, the lowest in the 23-year history of TIPS auctions of this term.
This is CUSIP 912828ZZ6, and it got a coupon rate of 0.125%, the lowest the Treasury will allow for a TIPS. That means investors at today’s auction had to pay a huge premium for this TIPS: an adjusted price of about $111.03 for about $100.01 of value, after accrued inflation and interest are added in.
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Treasury Inflation-Protected Securities 
You have mentioned that you do not buy the TIP ETF because it is not diversified. Given that we are now living in zero interest rate environment with the potential of inflation post corona, would it not be better to buy this ETF instead of the one you recommend, AGG, because it is better diversified?
I don’t have a problem with investing in the TIP ETF, but only as a supplemental fund in addition to core bond funds, like AGG. I own a lot of individual TIPS and I Bonds, so I don’t need to add more inflation protection. I just wrote an article about the risks of the TIP ETF: https://seekingalpha.com/article/4366647-tip-etf-inflation-protection-side-of-risk
You’d be paying regular income taxes on the 0.125% each year, and at the end of the 10 years, if there had been zero inflation, you would have a capital loss and you’d receive the original par value of your investment.
so the real yield is -.93%. So after 10 years if there is no inflation you would los3 9.3% and gain 1.25%. So could you write that loss off in a taxable account??? Sorry if I fully don’t understand this. I saw on the secondary market 30 year tips are at -.44% today. That’s crazy.