2018: Recapping The Year In Inflation-Protected Investments

Posted on December 26, 2018 by Tipswatch

Summary

  • Both real and nominal yields climbed sharply in 2018, especially for shorter terms. The yield curve has dramatically flattened, possibly pointing to an economic slowdown.
  • TIPS auctions were a mixed bag in 2018: the 30-year auctions were unattractive, the 10-year auctions were acceptable, and the 5-year auctions became stellar.
  • The I Bond’s fixed rate climbed to 0.5%, much higher than recent levels. But a higher rate could still be coming in 2019. Hold off on purchases in 2019.

Read my full analysis on SeekingAlpha.com

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5-Year TIPS Reopening Gets Real Yield Of 1.129%, Highest In Nearly 10 Years

Posted on December 20, 2018 by Tipswatch

Summary

  • You have to go back to April 2009 to find a 4- to 5-year TIPS auction with a higher real yield.
  • The inflation breakeven rate came in at 1.51%, very low by recent trends and a favorable indicator for investors.
  • At one point just after the auction closed, this 5-year TIPS was trading with a higher real yield than comparable 10-, 20- and 30-year TIPS.

Read my full analysis on Seeking Alpha.com

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This Week’s 5-Year TIPS Auction Is A ‘Screaming Buy’

Posted on December 17, 2018 by Tipswatch

Summary

  • The real yield could be about 1.12%, the highest after-inflation yield in nearly 10 years of 4- to 5-year TIPS auctions.
  • The real yield curve has inverted, with the 5-year TIPS now yielding about 6 basis points more than a 10-year TIPS.
  • The inflation breakeven rate is currently a very reasonable 1.60%, making this TIPS desirable versus a nominal 5-year Treasury, and still competitive with best-in-nation bank CDs offering 3.5%.

Read my full analysis on SeekingAlpha.com

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Falling Gas Prices Leave U.S. Inflation Unchanged In November

Posted on December 12, 2018 by Tipswatch

Summary

  • Headline inflation came in at 0.0% in November and was up 2.2% year-over-year. Core inflation was up 0.2% for the month and 2.2% for the year.
  • Non-seasonally adjusted inflation actually fell 0.33% in November, which means investors in TIPS will take a hit in January, as principal balances decline.
  • Overall inflation remains moderate. We have not entered a deflationary period.

Read my full analysis on SeekingAlpha.com

Also, I’ve updated my Inflation and I Bonds page with the November numbers.

And here are the new January Inflation Indexes for all TIPS.

 

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10-Year TIPS Auctions At 1.109%, Highest In Nearly 8 Years

Posted on November 21, 2018 by Tipswatch

Summary

  • The last time a 9- to 10-year TIPS auctioned with a real yield above 1.00% was on January 20, 2011, at 1.17%.
  • Buyers got this TIPS at a substantial discount because the real yield was well above the coupon rate of 0.750%.
  • The inflation breakeven rate came in at 1.99%, lower than in recent auctions. Another good sign for investors.

Read my full analysis on SeekingAlpha.com

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