By David Enna, Tipswatch.com
In a few days, CUSIP 912828H45 – a 10-year TIPS that originated at auction on Jan. 22, 2015 – will mature. This was a ho-hum TIPS that came to life at a strange time in the U.S. bond market.
At the originating auction, it got a real yield to maturity of 0.315% and an inflation breakeven rate of 1.57%. At the time, a 10-year Treasury note had an ultra-low nominal yield of just 1.89%, well below today’s 10-year real yield of about 2.34%.
In my preview article for that auction, I noted intense volatility in the U.S. Treasury market. I wasn’t a fan and I wasn’t a buyer.
So at this point, with the auction a week away, it appears this new TIPS issue will get a coupon rate of 0.250% and a real yield (after inflation) a bit higher than that. A year ago, a 10-year TIPS went off with a yield of 0.661% – about 37 basis points higher.
Now, 10 years later … that very low inflation breakeven rate made CUSIP 912828H45 a very attractive investment, at least compared to the nominal 10-year Treasury of the time. Annual inflation over the next 10 years averaged 2.9%, well above the breakeven rate of 1.57%. This TIPS absolutely walloped the comparable Treasury note by 133 basis points a year.
The final investment results for this TIPS were set by the November inflation report issued Dec. 11. Data from Eyebonds.info show this TIPS generated a 10-year nominal annual return of 3.241%, crushing the comparable Treasury note at 1.89%.
OK, 3.24% may not seem like much, but keep in mind that the 10-year nominal Treasury yield didn’t didn’t reach 3.0% from January 2015 until fall 2018, and that was a brief period before slipping below that level again until spring 2022.
As a reader pointed out in the comments, over the last 10 years Vanguard’s Total Bond ETF (BND) has had an annual total return of 1.14%. Total return of the TIP ETF was 1.93%, and VTIP (shorter-term TIPS) was 2.51%, all below the 10-year average inflation rate.
For its time, CUSIP 912828H45 was a very good investment, with the widest gap over a 10-year nominal Treasury since I started tracking this auction data in 2013.
TIPS versus an I Bond
If you purchased an I Bond in January 2015, it had a fixed rate of 0.0%, below the real yield of this TIPS at 0.315%. According to Eyebonds.info, that I Bond will have generated an average annual return of 2.85% as of July 2025. So again, the TIPS was the superior investment at 3.241%.
However, the I Bond has outperformed the 10-year nominal Treasury.
Thoughts
TIPS have been on a winning streak for several years, caused by the surge to 40-year high inflation that peaked in June 2022 at 9.1%. Even today, annual inflation is running higher than the auctioned breakeven rates of 2015. And so TIPS have been the winners versus nominal Treasurys in recent years.
Notes and qualifications
My chart is an estimate of performance comparing inflation breakeven rates versus actual inflation.
Keep in mind that interest on a nominal Treasury and the TIPS coupon rate is paid out as current-year income and not reinvested. So in the case of a nominal Treasury, the interest earned could be reinvested elsewhere, which would potentially boost the gain. For certain, we don’t know what the investor could have earned precisely on an investment after re-investments.
In the case of a TIPS, the inflation adjustment compounds over time, and that will give TIPS a slight boost in return that isn’t reflected in the “average inflation” numbers presented in the chart.
• Now is an ideal time to build a TIPS ladder
• Confused by TIPS? Read my Q&A on TIPS
• TIPS in depth: Understand the language
• TIPS on the secondary market: Things to consider
• TIPS investor: Don’t over-think the threat of deflation
• Upcoming schedule of TIPS auctions
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Follow Tipswatch on X (Twitter) for updates on daily Treasury auctions and real yield trends (when I am not traveling).
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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
Treasury Inflation-Protected Securities 
I thought of an idea for a future blog post that may be of interest, David (if you have not already done this):.
A historical look at TIPS yields the day after they have become available on the secondary market, compared to what they sold for at auction.
It would be interesting to see if there has been any trend…whether it was better to wait and buy on the secondary market or to buy at auction.
Of course, it would be difficult to draw any conclusions about the future from this, but it would be interesting to see.
This would be tough to do, at least for a new issue, which doesn’t actually settle until two weeks later. My thinking is that generally the changes would be random, but I can’t say for sure.
I agree that is probably the case (random, that is).
But maybe not. There may be an element of psychology involved, if enough buyers believe they will either get a better rate at auction or on the secondary market, which could move market values.
For us TIPS newbies it might be helpful to see a list of all the transaction detail that happened over the life of that TIPS issue ($1,000). What was initial purchase price, what was accrued interest paid at purchase, what was each payment (date and amount, including calculations) and what was paid out at maturity.
Some of us may not fully understand the tabular data presentation yet.
The site EyeBonds.info has all that information, but you might find parsing all the information difficult. Go for it! https://eyebonds.info/tips/hist/tips55hista.html
That is precisely what I was looking for. Thanks so much for posting the link.
Hi David, This year, I’m planning to invest a fair amount of money in 10 year TIPS (TIPS maturing in 2035). With the recent surge in 10 year interest rates, I’m trying to decide if it’s better to invest the entire amount at the January TIPS auction or make periodic investments throughout the year whenever there is news that causes interest rates jump. I found the following information for stocks but no similar analysis for bonds: “Lump-sum investing outperforms dollar-cost averaging 75 percent of the time, according to historical data, and is often well suited to investors who have a large sum to invest at once. Dollar-cost averaging may be a better option if you would like to reduce volatility in your portfolio.” Obviously, the best course of action depends on whether you think rates will continue to climb or turn around and go lower, but I think that is impossible to predict. Other than trying to predict future interest rates, do you have any thoughts on the best way to time investing a large sum in 10 year TIPS this year? Thanks!
My opinion: There is no way to know the correct answer until the year is over. Last year, I bought at the January auction (1.81%) and then bought that same January issue later in the year when real yields rose (2.043%). I also bought some of the July 2034 TIPS at 2.008%. The unknown factor is: will real yields continue climbing in 2025? That’s definitely possible, but no sure thing. In my case, I will probably buy a large portion in January if real yields continue at this attractive rate. With TIPS, my philosophy is often: “If I see a real yield I like, I buy and don’t look back.”
Sal, that works for equities because in long-term trends the US equity market has a decidedly strong upward curve, so more time in the market equals more gains. It goes to the old saying of “time in the market beats timing the market.” I suppose a question for you to consider is where you’ll be keeping that (diminishing) lump sum over time. Will you have it in the equity market, selling stocks as you make decisions to buy T-bills? Or will you have it in a Money Market account, earning a consistent amount and ready to go? Which pattern ends up being better may depend on how equities or MMAs return over the year. But perhaps more importantly, will it give you stress and heartburn to constantly be making a call on whether or not to buy more?
I would like to buy some 2035 TIPS being offered this week. But I don’t see them yet on Schwab. Do you know when we will be able to put an order to buy at the auction? Thanks.
The auction isn’t until Jan 23. Purchases should open this Thursday.
Thanks.
I bought this one at auction. I was reasonably pleased with the real yield to maturity at the time (0.315%) though that looks pretty meager to what is available now. I am pleased with how it performed considering what else was available at the time. I am seriously considering reinvesting the proceeds in the upcoming 10 year TIPS auction and am looking forward to your analysis to assist me in making a decision.
Love it….thanks for your analysis
Thank you for this ongoing Tipswatch David; an interesting and perplexing savings instrument.
Are the coupon payments inflation adjusted?
The coupon interest rate is constant but the underlying principal increases with inflation (or decreases with deflation). So yes, the actual payments are inflation adjusted.
These post-mortems are fascinating (even though I didn’t own this particular TIPS). I wanted to look at 10-year total returns on Morningstar of roughly comparable or popular ETFs and bond funds, and none came close to the 3.24% return of this TIPS. The TIP ETF returned 1.93%. And the intermediate term Treasury (7-10 yrs) IEF returned .33%. The closest was actively managed DODIX with a 2.31% 10-yr total return (as of Jan 10). Of course that has all sorts of bonds and only about 18% are government-issued. Total return, I believe, would incorporate reinvested dividends.
Good point. The total bond market’s total return has averaged 1.14% over 10 years. TIP was 1.93%, and VTIP (shorter-term TIPS) was 2.51%, all below the 10-year average inflation rate.