Category Archives: Investing in TIPS

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 →

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 →

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 →

Summary 12-month inflation has dipped to 1.9%, down from 2.7% in February. Core inflation is up 1.7% over the last year, also in a downward trend. Will the Federal Reserve back off on interest rate increases? Not likely today, but … Continue reading →

Summary Real yields fell sharply this week in reaction to White House turmoil. The 10-year inflation breakeven rate came in at an attractive 1.79%, making this TIPS attractive versus a nominal Treasury. Market reaction looks positive, with TIPS yields falling … Continue reading →