Treasury Inflation-Protected Securities

• A real yield around 0.91% won’t be enough justify an investment in a highly-volatile issue, even for most buy-and-traders.
• If you’re older than 60, the 30-year term isn’t appealing as a buy-and-hold investment.
• This TIPS is likely to be cash-flow negative in a taxable account.

The U.S. Treasury announced Thursday that it will auction $7 billion in a new 30-year Treasury Inflation Protected Security (CUSIP 912810RW0) on Thursday, February 16. I haven’t been a fan of the 30-year TIPS maturity for several years, especially when after-inflation yields are well below the 2% benchmark typical in such a long-term investment.

Read my full analysis on SeekingAlpha.com

• Short-term TIPS have real yields negative to inflation.
• An I Bond with a fixed rate of 0.0% will match inflation and provide a better return than a short-term TIPS.
• For a short-term TIPS fund to outperform, real yields will have to fall deeper into the negative range, which seems unlikely.

I suggesting that you take a look at an alternative to short-term TIPS funds: U.S. Series I Savings Bonds.

Read my full analysis on SeekingAlpha.com

• FRNs are getting more intriguing as interest rates rise from near-zero levels.
• They offer protection against rising interest rates, but not rising inflation. That makes FRNs a good complement to TIPS and I Bonds.
• But are they a good idea for a small investor? Will you do better with a 2-year bank CD?

Read my full analysis at SeekingAlpha.com

• News is not good for I Bond investors: Inflation is flat over first three months of rate-setting period.
• Year-over-year ‘headline’ inflation broke through the 2.0% barrier for the first time since June 2014.
• Core inflation rose 2.2% in 2016, above the Federal Reserve’s target of 2.0%.

Read my full analysis on SeekingAlpha.com

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

And here are the new CPI Indexes for TIPS in February.