Summary
- Real yields have declined sharply in recent days, dropping the 5-year yield to 0.03%.
- When the 5-year TIPS yield approaches zero, I Bonds and bank CDs become attractive alternatives.
- Inflation expectations have been declining over the last month, even as demand for TIPS rises.
The U.S. Treasury on April 20 will auction $16 billion in a new 5-year Treasury Inflation-Protected Security (CUSIP 912828X39). The coupon rate and real yield to maturity (after inflation) will be determined at the close of the auction.
Just a reminder: Almost every person who bought a TIPS in the last 15 years got a real yield to…