Author Archives: tipswatch

5-Year TIPS Reopening: Don’t Let Dip In Real Yields Scare You Away

Summary Real yields for this term have dipped about 8 basis points since August 1. Not a great trend heading into an auction week. But current after-inflation yields above 0.75% are attractive, and would be the highest yield at auction … Continue reading

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July Inflation Rises 0.2%: What This Means For TIPS, I Bonds And Social Security

Summary 12-month core inflation rose to 2.4%, the highest number since September 2008. Non-seasonally adjusted inflation was essentially flat, meaning minimal principal increases for TIPS and little change in the six-month total that will reset the I Bond’s variable rate. … Continue reading

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Is The Flat Yield Curve Distorting The Value Of TIPS Mutual Funds?

Summary Real yields are out of balance with historical norms. A 5-year TIPS is yielding only 13 basis points less than a 30-year TIPS. Are we heading toward a recession? Would TIPS mutual funds benefit? Possibly, if the Federal Reserves … Continue reading

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Social Security COLA Looks Likely To Top 3% In 2019

Summary The year-over-year increase in CPI-W was 3.1% in June, higher than overall ‘headline’ inflation measured by CPI-U. Inflation measured by CPI-W in July, August and September will be averaged and compared to 2017 to determine the Social Security COLA … Continue reading

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Here’s Why Donald Trump Is Wrong About Interest Rates

Summary Even after rising in recent months, short-term interest rates remain below the level suggested by an inflation rate of 2.9% and relatively strong economic growth. A more reasonable Federal Funds Rate would be in the range of 3.25% to … Continue reading

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New 10-Year TIPS Nabs 7-Year High Coupon Rate Of 0.75%

Summary Today’s result broke a string of 42 consecutive TIPS auctions of the 9- to 10-year term with a coupon rate below 0.75%. The actual real yield to maturity was 0.762%, slightly lower than expected, indicating good demand. But the … Continue reading

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10-Year TIPS: This Week’s Auction Looks Attractive, Sort Of

Summary CUSIP 912828Y38 is a new 10-year TIPS that currently projects to have a real yield of 0.72% and a coupon rate of 0.625%. But a lot can change before the July 19 auction. Can the real yield rise above … Continue reading

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