Treasury Inflation-Protected Securities

• While shorter-term real yields have been gradually increasing, the 30-year yield has actually been declining.
• Investors at Thursday’s auction will probably pay a 2% premium over par value because this TIPS currently has a market yield below the coupon rate of 1.00%.
• On the positive side, the current inflation breakeven rate of 2.13% is reasonable and attractive.

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• ‘Headline’ inflation rose 0.2% in May, but is up 2.8% over the last 12 months, highest since February 2012.
• Core inflation also increased 0.2%, showing that gasoline prices are not the sole source of inflationary pressure.
• Non-seasonally adjusted inflation was up 0.42% in May. What does this means for holders of TIPS and I Bonds?

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Also, I have updated my Inflation and I Bonds page with the new numbers.

And here are the new July inflation indexes for all TIPS.

• The Savings Bond Wizard has been a useful tool for Savings Bond investors for more than 15 years. Now it is gone.
• The Treasury has replaced it with the Savings Bond Calculator, a similar Web-browser-based tool that is a bit less user friendly.
• I’ve created a step-by-step guide for exporting your bond data from the Wizard to the Calculator.

Read my step-by-step guide at SeekingAlpha.com

• The real (after-inflation) yield looks likely to climb above 0.80%, a seven-year high for TIPS of this term.
• The inflation breakeven rate is climbing toward 2.15%, meaning this TIPS is not “cheap” versus a nominal Treasury. But it’s not “expensive,” either.
• Think real yields will continue climbing? You’ll have three more chances in 2018 to buy a TIPS of this term.

Read my full analysis on SeekingAlpha.com