30-Year TIPS: Poster Child For A ‘Volatile’ Safe Investment

Summary

  • The Treasury will reopen CUSIP 912810SM1 in a Thursday auction, creating a 29-year, 6-month TIPS.
  • The real yield looks likely to be around -0.26%, making this the first TIPS of this term to get a negative real yield.
  • Investors will probably pay a huge premium, about 16% above par value. This TIPS isn’t attractive for a buy-and-hold-to-maturity investor.
  • But for a TIPS trader, it might have speculative appeal.

The U.S. Treasury will be offering $7 billion Thursday in a reopening auction of CUSIP 912810SM1, creating a 29-year, 6-month Treasury Inflation Protected Security. Do I think you should invest in this TIPS? No. But let’s look at it anyway.

Read my full analysis on SeekingAlpha.com

30-year TIPS yield

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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