I Bond Investors: Hold Off On Purchases Despite A Declining Variable Rate

Posted on April 12, 2018 by Tipswatch

Summary

  • The I Bond’s six-month variable rate will fall from 2.48% to 2.22% on May 1. The difference in yields is temporary and negligible.
  • The fixed rate will also be reset May 1, and odds are that it will hold at 0.1% — or rise to 0.2%, possibly even 0.3%.
  • The potential for a higher fixed rate means investors should delay purchases at least until after May 1, maybe even later.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

I Bond’s Variable Rate Will Fall To 2.22% On May 1

Posted on April 11, 2018 by Tipswatch

Summary

  • Non-seasonally adjusted inflation from September 2017 to March 2018 rose 1.11%, which creates the new annualized rate.
  • Seasonally adjusted inflation in March actually dropped 0.1%, which was below expectations. Core inflation came in at 0.2%.
  • Both ‘headline’ and core inflation are at one-year highs.

The variable rate on U.S. Series I Savings Bonds will fall from 2.48% to 2.22% for I Bonds purchased after May 1, based on the March inflation numbers just released by the U.S. Bureau of Labor Statistics.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

10-Year TIPS Reopens With A Yield Of 0.764%, Highest In Nearly 7 Years

Posted on March 22, 2018 by Tipswatch

Summary

  • The after-inflation yield was 21 basis points higher than the originating auction in January.
  • Because this TIPS has a coupon rate of 0.5%, buyers got it at a discount: about $97.93 for $100.43 of value, after accrued inflation is added in.
  • The inflation breakeven rate was 2.07%, indicating this TIPS is fairly priced against a nominal Treasury of the same term.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

10-Year TIPS Will Reopen Thursday At A Nice Discount

Posted on March 18, 2018 by Tipswatch

Summary

  • CUSIP 9128283R9, with a coupon rate of 0.5%, probably will auction with an after-inflation yield near 0.75%.
  • That means buyers will get it at a discount to par value, about $97.50 per $100 before accrued inflation is added in.
  • The inflation breakeven rate is in the ‘neutral’ zone, meaning this TIPS is fairly priced versus a nominal 10-year Treasury.

I’d say this auction looks attractive. The inflation breakeven rate is reasonable and if the 10-year yield can hold above 0.75%, it would mark the highest yield since May 2011 for a 9- to 10-year TIPS at auction. That’s nearly seven years!

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment

U.S. Inflation Rose 0.2% In February, Matching Expectations

Posted on March 13, 2018 by Tipswatch

Summary

  • Gasoline prices fell 0.9%, which helped to moderate overall inflation. Food prices held steady.
  • Non-seasonally adjusted inflation rose 0.45% in the month, meaning TIPS principal balances will rise 0.45% in April.
  • The February number is the fifth in a six-month period that will determine the I Bond’s new variable rate, to be reset May 1.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | Leave a comment