Category Archives: Investing in TIPS

The Formula: How Much Will Social Security Benefits Increase In 2018?

Summary News media widely reported that a 2.2% increase in Social Security benefits is likely in January 2018. How is the COLA determined and how could anyone project it in early July? We need three months of data – inflation … Continue reading

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10-Year TIPS Auctions With A Real Yield Of 0.489%

Summary The coupon rate was set at 0.375%, so buyers got this TIPS at a discount. The inflation breakeven rate came in at 1.76%, which is attractive. Market reaction to the auction is trending negative, with yields rising and the … Continue reading

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New 10-Year TIPS Will Auction July 20; Is It Worth A Look?

Summary This new TIPS could have the highest real yield since January 2016, but┬ákeep an eye on yield trends – they have been falling. The current inflation breakeven rate of 1.78% makes this TIPS attractive versus nominal Treasurys. A reason … Continue reading

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U.S. Inflation Was Unchanged In June, Again Below Expectations

Summary Both headline and core numbers for year-over-year inflation have fallen well below the Federal Reserve’s 2.0% target. Falling gasoline prices again accounted for the low June number. Used vehicle prices also have been falling. What does this mean for … Continue reading

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Does TIPS’ Inflation Break-Even Rate Accurately Predict Future Inflation?

Summary The break-even rate details investors’ inflation expectations. It is not a predictor of future inflation. The trend since 1997 seems to indicate that investors underestimate future inflation. But TIPS have underperformed recently. Rising real yields and still-low inflation break-evens … Continue reading

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30-Year TIPS Reopening Auctions With A Disappointing Real Yield Of 0.88%

Summary Long-term real yields have been declining slightly while short-term yield are rising sharply. A yield of 0.88% is very close to this TIPS’ coupon rate of 0.875%. The adjusted price is close to par, when accrued inflation is added … Continue reading

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30-Year TIPS Will Reopen At Auction On June 22; Is It Worth A Look?

Summary The real yield looks likely to come in right around 0.95%, close to the originating auction result. The inflation breakeven rate is trending at 1.83%, pretty desirable. One warning: Do not buy this TIPS in a taxable account. It … Continue reading

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