10-Year TIPS Auctions With A Real Yield Of 0.489%

Posted on July 20, 2017 by Tipswatch

Summary

  • The coupon rate was set at 0.375%, so buyers got this TIPS at a discount.
  • The inflation breakeven rate came in at 1.76%, which is attractive.
  • Market reaction to the auction is trending negative, with yields rising and the TIP ETF falling after the auction’s close.

Read my full analysis on SeekingAlpha.com

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New 10-Year TIPS Will Auction July 20; Is It Worth A Look?

Posted on July 18, 2017 by Tipswatch

Summary

  • This new TIPS could have the highest real yield since January 2016, but keep an eye on yield trends – they have been falling.
  • The current inflation breakeven rate of 1.78% makes this TIPS attractive versus nominal Treasurys.
  • A reason to celebrate? Possibly.

I’m sorry — I have been on vacation this week in rural Wisconsin and had extremely limited Internet! I wrote an article on Sunday for SeekingAlpha.com, but once it was published I was in the dead zone. As of the close Tuesday, it was looking like this new TIPS could go off at 0.50% or lower, and I am losing interest … Keep an eye out, though.

Read my full analysis on SeekingAlpha.com

 

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U.S. Inflation Was Unchanged In June, Again Below Expectations

Posted on July 14, 2017 by Tipswatch

Summary

  • Both headline and core numbers for year-over-year inflation have fallen well below the Federal Reserve’s 2.0% target.
  • Falling gasoline prices again accounted for the low June number. Used vehicle prices also have been falling.
  • What does this mean for investors in TIPS and I Bonds? Possibly lower real yields and a short-term period of mild inflation.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | 1 Comment

Does TIPS’ Inflation Break-Even Rate Accurately Predict Future Inflation?

Posted on July 10, 2017 by Tipswatch

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 mean that TIPS are getting more attractive as an investment in 2017.

In the 11 years of TIPS auctions with completed 10-year maturities, inflation was underestimated in seven of those years, and overestimated in four of those years.

Read my full analysis on SeekingAlpha.com

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30-Year TIPS Reopening Auctions With A Disappointing Real Yield Of 0.88%

Posted on June 22, 2017 by Tipswatch

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 in.
  • The inflation breakeven rate of 1.84% is attractive — and the reason this auction was greeted with apparent strong demand.

Read my full analysis on SeekingAlpha.com

Posted in Investing in TIPS | 1 Comment