Any chance the Treasury will raise the I Bond’s fixed rate in November?

Posted on August 4, 2021 by Tipswatch

Let’s be realistic. It won’t happen.

By David Enna, Tipswatch.com

This is a question I’ve been getting often in reader e-mails: “Dave, do you think the Treasury will raise the I Bond’s fixed rate in November? Should I wait until November to buy?”

Here is my in-depth analysis:

  • Could the Treasury raise the I Bond’s fixed rate in November? Yes, it could.
  • Will the Treasury raise the I Bond’s fixed rate in November? No, it won’t.

The Treasury does not disclose how it sets the fixed rate on Series I Savings Bonds, and so this leads people to speculate about what’s coming at the next reset, on November 1. This is a very important decision, because the I Bond’s fixed rate stays with that investment until redemption or maturity in 30 years. The fixed rate is combined with an inflation-adjusted rate (I call it the “variable rate” but that’s not the official term) that adjusts every six months, based on official U.S. inflation.

Want to know more about I Bonds? Read this.

An I Bond purchased today will have a fixed rate of 0.0%, combined with a variable rate of 3.54%, creating a composite rate of 3.54% for six months. The fixed rate will be “reset” on November 1, but I’m predicting with 99% certainty that it will remain at 0.0%. Why not 100% certainty? Because the Treasury occasionally does strange things. But I don’t think that’s coming in November. Not under these market conditions.

I think the best indicator of a future I Bond’s fixed rate is the spread between the fixed rate and the real yield to maturity of a 10-year Treasury Inflation-Protected Security. Under “normal” circumstances, a 10-year TIPS will have a real yield 40 to 50 basis points higher than the I Bond’s fixed rate. This has varied widely, though, because the Treasury does strange things.

Take a look at this chart, which shows every fixed rate reset for the I Bond where the rate was higher than 0.0%, going back to November 2008.

The important thing to note is that in no case, going back 13 years, has the Treasury set the I Bond’s fixed rate above 0.0% when the 10-year TIPS had a negative real yield. Right now, a 10-year TIPS is yielding -1.19%, meaning that an I Bond with a 0.0% fixed rate has a massive 119-basis-point advantage over a 10-year TIPS.

Remember, under “normal” circumstances, a 10-year TIPS would have a 40- to 50-basis-point advantage over an I Bond. (This is justified because of the I Bond’s flexible maturity, tax-deferred interest and better deflation protection.) Now that situation is reversed, with the I Bond having a 119-basis-point advantage, making the I Bond a much, much better investment. There is no way, under these market conditions, that the Treasury would increase the I Bond’s fixed rate.

But things can change, right?

Hey, isn’t it possible that the Federal Reserve could radically change course and halt its bond-buying stimulus and begin raising interest rates, before November 1, causing 10-year real yields to soar well above zero? (I’ll pause here for laughter.) No, that isn’t going to happen.

I’d expect 10-year real yields to drift a bit before November 1, possibly even rise a bit, but not get anywhere near zero in just three months. So expect real yields to remain negative through 2021, and expect the I Bond’s fixed rate to remain at 0.0%.

Here’s a look back at the I Bond’s entire fixed-rate history back to 2008, which includes the Fed’s last periods of bond-buying-tapering (beginning in January 2014) and interest-rate-hiking (beginning in December 2015) and the effect these actions had on the 10-year real yield, and the I Bond’s fixed rate:

Note that the Fed’s initial launch into quantitative easing, in November 2010, set off a string of six consecutive I Bond rate resets to 0.0%. During that time, the 10-year real yield dipped well below zero several times at the reset date, and at each of those times the I Bond got a 0.0% fixed rate.

The fixed rate finally rose above 0.0% in November 2013, after a year of market turmoil caused by the bond market’s “taper tantrum.” Up to this point, the Fed had loudly announced its intention to taper, but didn’t actually begin slowing its bond buying until January 2014. It ended in October 2014.

Where are we right now?

At the moment, the Federal Reserve is holding short-term interest rates near zero and is buying $120 billion of Treasurys and mortgage-backed securities each month. We are solidly in a period of quantitative easing, but the Fed is now hinting it “may” begin scaling back its bond-buying “sometime in the future.”

What time in the past matches up our current conditions? I’d say mid-2012, when both the 5-year and 10-year TIPS had real yields deeply below zero. But by November 2013, when the Fed had announced plans to taper its bond buying — resulting in a bond market “taper tantrum” — the 10-year real yield had soared to 0.40% and the Treasury finally raised the I Bond’s fixed rate to 0.2%, up from 0.0%.

The past indicates we are a year or maybe 18 months away from a higher fixed rate for the I Bond, if the Fed carries through with its hints of an end to aggressive economic stimulus. But this Fed seems stubbornly insistent on keeping the stimulus pumping as long as possible. So who knows? But it won’t happen in 2021.

What this means for an I Bond purchase

If I am correct that the fixed rate will stay at 0.0%, I’d say it makes sense to buy I Bonds now to take advantage of six months of the very attractive composite rate of 3.54%. The next variable rate reset in November could be even higher, possibly has high as 6%, but all I Bonds will get that new variable rate for six months, no matter when they were purchased.

Waiting to purchase after November only makes sense if you think the fixed rate will rise. If it doesn’t, you’ll miss out on 3.54% for six months, an extremely attractive rate in our current market.

Looking back at Fed actions. Here is more on this topic, from a series of articles I wrote speculating on possible results of the Fed’s future actions:

When the Fed begins tapering, what will happen to TIPS?

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in I Bond, Savings Bond | 2 Comments

A 10-year TIPS matured in July. How did it do as an investment?

Posted on July 25, 2021 by Tipswatch

Not so well, it turns out, slammed by a decade of lower-than-expected inflation.

By David Enna, Tipswatch.com

Today we will take a look at CUSIP 912828QV5, a 10-year Treasury Inflation-Protected Security that originated on July 15, 2011, with a real yield to maturity of 0.639%. It matured on July 15, 2021. The question: How did it do as an investment, versus a nominal 10-year Treasury note?

I’ve been tracking the performance of every maturing 5- and 10-year TIPS on my Tips vs. Nominals page, and for much of the last decade-plus, TIPS have been a fairly lousy investment, at least versus a nominal Treasury of the same term. The reason: Inflation expectations at the time of issue ended up being higher than actual inflation over the term of the TIPS. When inflation lags expectations, TIPS perform poorly.

Back on July 11, 2011, CUSIP 912828QV5 auctioned with a real yield of 0.639% and a coupon rate of 0.625%, terms that look super appealing today. Yet it’s hard to believe that 0.639% was the second lowest 10-year TIPS auction result in history, up to that point. In July 2011, we were just entering a decade-plus era of Federal Reserve intervention in the bond markets. Just six months later, in January 2012, a new 10-year TIPS auctioned with a real yield of -0.046%, the first of nine straight auctions of this term with a negative real yield.

The key factor in judging the performance of a TIPS versus a nominal Treasury is the inflation breakeven rate, the spread between the real yield of a TIPS and the nominal yield of a Treasury. That spread represents a prediction from investors about future inflation. Unfortunately, this prediction is almost always wrong, too high or too low. And for the last decade, investors have been betting on higher inflation than actually resulted.

Here are the data for maturing 10-year TIPS:

Although CUSIP 912828QV5 had an appealing real yield of 0.639%, on the day of the auction the 10-year Treasury note was yielding 3.03%, creating an inflation breakeven rate of 2.39%, rather high for that period. Ten years later, inflation had averaged just 1.8%, meaning that the TIPS under-performed the nominal Treasury by 0.59% a year.

Investors in this TIPS ended up missing out on a strong month for inflation, because inflation accruals for a TIPS are set by inflation two months prior to the accrual. So, this TIPS did not get a bump from a 0.93% increase in non-seasonally-adjusted inflation in June 2021. If June had counted, the annual inflation rate would have risen to 1.9% and the variance would have dropped to -0.49%.

Some thoughts and qualifications

We just completed a decade-long period of inflation running at less than 2.0%. In general TIPS out-perform nominal Treasurys when the inflation-breakeven rate drops below 2.0%, especially for 10-year TIPS. But the next decade could be entirely different. Never predict the future decade based on the performance of the past decade.

Also, this chart is an estimate of performance, because it uses a full month of inflation in the ending month, when actually TIPS accruals are based on a half month for the first and last months, with the origination and maturity occurring on the 15th of the month.

Keep in mind that interest on a nominal Treasury and the TIPS coupon rate is paid out as current-year income and not reinvested. So in the case of a nominal Treasury, the interest earned could be reinvested elsewhere, which would potentially boost the gain. For certain, we don’t know what the investor could have earned precisely on an investment after re-investments.

In the case of a TIPS, the inflation adjustment compounds over time, and that will give TIPS a slight boost in return that isn’t reflected in the “average inflation” numbers presented in the chart.

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Inflation, Investing in TIPS | 5 Comments

Auction of new 10-year TIPS gets record-low real yield of -1.016%

Posted on July 22, 2021 by Tipswatch

By David Enna, Tipswatch.com

The U.S. Treasury’s auction today of $16 billion in a new 10-year Treasury Inflation-Protected Security resulted in a real yield to maturity of -1.016%, the lowest in history for any TIPS auction with a 9- to 10-year term.

This is CUSIP 91282CCM1, and it was assigned a coupon rate of 0.125%, the lowest the Treasury will go for any TIPS.

A TIPS is an investment that pays a coupon rate well below that of other Treasury investments of the same term. But with a TIPS, the principal balance adjusts each month (usually up, but sometimes down) to match the current U.S. inflation rate. So the “real yield to maturity” of a TIPS indicates how much an investor will earn above (or in this case, below) inflation.

In the case of CUSIP 91282CCM1, investors were willing to accept a real yield that will lag official U.S. inflation by 1.016% a year for 10 years. Why would they do that? Two reasons: 1) because a TIPS offers protection against unexpectedly high future inflation, and 2) the yield of a nominal 10-year Treasury — currently at 1.25% — is also highly likely to lag inflation, but with no upside potential. For many investors, a TIPS looks like the better option.

Investors at Thursday’s auction had to pay a steep premium price to collect that coupon rate of 0.125%, plus future inflation accruals. The adjusted price for this TIPS was about $112.42 for about $100.44 of value, after accrued inflation and interest are added in. This TIPS will have an inflation index of 1.00387 on the settlement date of July 30.

The auction appears to have gone off without a hitch. The real yield was a bit lower than the Treasury’s yield estimate of -0.98% at the market close Wednesday. But at 12:30 p.m., the most recent 10-year TIPS trading on the secondary market was yielding -1.03%. So -1.016% looks like a reasonable result. The auction’s bid-to-cover ratio was 2.5, a solid if not stellar number.

Here is the year-to-date trend in 10-year real yields, showing the recent dip in yields as the delta variant of COVID-19 raises fears of a future economic slowdown:

This recent dip, however, is remarkable because it has followed the Federal Reserve’s June 16 “talking about talking about” meeting that should be setting a course toward tapering of its aggressive bond-buying program. When that bond buying ends — if it ever ends — both nominal and real yields are almost certain to rise.

Inflation breakeven rate

The one oddity of this auction is a dip the 10-year inflation breakeven rate for this TIPS, which came in at 2.27%, a bit below recent auctions of this term. The breakeven rate is determined by subtracting the real yield of this TIPS (-1.016%) from the current nominal yield of a 10-year Treasury (1.25%). The result is 2.27%. It means that this TIPS will outperform its nominal counterpart if inflation averages more than 2.27% over the next 10 years.

While 2.27% is high by historical standards, it seems reasonable given recent trends, with official U.S. inflation running at an annual rate of 5.4% as of June. So it is interesting to see that inflation expectations are now beginning to ease.

Here is the trend in the 10-year inflation breakeven rate for 2021 year to date:

Reaction to the auction

The TIPS ETF — which holds the full range of TIPS maturities — had been trading slightly higher all morning, indicating slightly lower yields. After the auction’s close at 1 p.m., the ETF ticked up, slightly. Not much to see here. This auction went off as expected.

Investors at today’s auction probably had to hold their noses to accept a record-low real yield for auctions of this term. However, the slight decline in the inflation breakeven rate reinforces the advantage of a TIPS over a nominal Treasury of the same term. Who wants to accept 1.25% for 10 years?

This TIPS will be reopened at auctions in September and November. It will be interesting to watch the trend in real yields through the end of the year.

Here’s a history of recent auctions of the 9- to 10-year term, dating back to January 2020. Note that today’s auction was the 8th in a row to get a negative real yield:

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Investing in TIPS | 3 Comments

Social Security COLA: An increase of 6% looks likely for 2022

Posted on July 19, 2021 by Tipswatch

(And here’s the esoteric and confusing way that is calculated)

By David Enna, Tipswatch.com

August 11, 2021 update: The July inflation report keeps the COLA on track for an increase of about 6%

Inflation trends through June 2021 make it look likely that next year’s cost-of-living adjustment for Social Security beneficiaries could fall into a range of 5.8% to 6.2% for 2022, the highest increase since a 7.4% bump in 1982. But if inflation continues at its current torrid pace, the COLA could be even higher.

The Social Security Administration’s COLA formula is ridiculously complex and little understood. Is it related to U.S. inflation? Yes, but not the inflation index you hear about each month. Does it reflect 12 months of U.S. inflation? Not really. Does it underestimate actual U.S. inflation? Most years, yes.

U.S. inflation (measured by CPI-U) is running at 5.4% as of June, but the Social Security Administration doesn’t use CPI-U. Instead, it uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For that index, the June annual increase was actually higher, at 6.1%.

You are going to see that number — 6.1% — used often as the projection for the Social Security COLA in 2022. It is the current estimate of the Senior Citizen’s League, a credible advocacy group. It looks to me to be a reasonable projection, but at this point, the COLA’s complex formula makes things iffy. Let’s take a look at how the COLA comes together …

The Index

CPI-W includes data only from households with at least 50% of income coming from clerical or wage-paying jobs. I’ve noted in the past that CPI-W generally lags slightly behind CPI-U, which means the Social Security COLA also generally lags behind the standard measure of U.S. inflation. This year, at least through June, it is running higher than official inflation.

CPI-W isn’t widely tracked or reported, but the Bureau of Labor Statistics updates the index each month in its overall inflation report. Right now, you could say, “Well, CPI-W is running at an annual rate of 6.1%, so that will likely be the COLA increase for 2020.” But that’s not true. In fact, the June number isn’t necessarily an accurate indicator, as shown in this chart:

June sets the baseline for the COLA increase, but then we come to …

The Formula

The SSA doesn’t look at a full year’s data to determine the COLA. Instead it uses the average CPI-W index for the third quarter — July, August and September. Here is the language from the SSA site:

A COLA effective for December of the current year is equal to the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA.

This wording means that the SSA eliminates years where inflation was zero or negative, and so there isn’t a “bounce-up” effect on benefits after a year of deflation. Instead, it goes back to the last year where there was an increase in benefits. But that won’t matter in this 2022 calculation, because the COLA rose 1.3% last year.

So, although 12-month CPI-W was up 6.1% in June, that number is only the baseline for the 2022 COLA increase. The only inflation numbers that will matter are for the third quarter: July, August and September. Last year, the CPI-W index averaged 253.412 in the third quarter. The June 2021 index was set at 266.412, or 5.1% higher than that average. So if we have zero inflation in the third quarter of 2021, the Social Security COLA be set at 5.1%.

U.S. inflation can be stubbornly finicky in the summer months, so predicting inflation from July to September is an impossible task. Hurricanes, gas shortages, food crop failures, stock market plunges, supply shortages, pandemic resurgence, etc., etc. It’s a guessing game, and nearly every summer brings some surprises.

Projecting the 2022 COLA

At this point, CPI-W is running at 6.1% over the last year, so you’d expect a continued inflationary trend of about 0.5% a month in July, August or September. But what if inflation dips after the multi-month surge so far in 2021? Could it run at 0.0% for three months? Doesn’t seem likely. But what about 0.4% a month? That seems possible.

Let’s take a look at how differences in 3rd-quarter inflation would alter the 2022 COLA:

My thinking is that after months of red-hot U.S. inflation, we could see things cool off a bit this summer. Used car prices aren’t likely to continue surging at a 45% annual pace, for example. Even air fares and hotel costs could slip if pandemic fears keep brewing. But other effects — gasoline and food costs, for example, and a possible spending surge caused by the new child care tax credit — could keep inflation rising a brisk pace.

Another factor is that CPI-W had a mild surge last summer, rising 0.6% in July and then 0.4% in August and 0.2% in September. That will make those numbers a bit harder to top than the June 2020 index, which was up 6.1% in June 2021.

So, if you think that CPI-W inflation will rise on average 0.3% a month in the 3rd quarter, you’d end up with a 5.8% COLA increase in 2022. If the average rises to 0.4%, the COLA would be 6.0% and if it rises to 0.5%, 6.2%. I think those are the most likely results, as I have shown in the chart.

That leads me to project that the 2022 Social Security COLA will fall into a range of 5.8% to 6.2%, and so let’s just go with 6.0% as most likely number.

Where can this go wrong? The stock market was taking a pummeling today, and two things also happened: Crude oil prices dipped sharply (down more than 7% today) and the U.S. dollar is getting stronger (up about 1.2% in the last month). Lower oil prices and a stronger dollar could dampen inflation over the next few months. Summer = market volatility.

What this means for Social Security recipients

The Social Security Administration currently estimates that the average retired beneficiary receives $1,555.25 a month, so a 6% increase would boost that monthly payment to about $1,648.56, an increase of $93.31 a month. If you are in the Social Security “limbo” period — older than 62 but not yet taking benefits — your future benefits would also climb by this percentage.

However, recipients can also expect that Medicare Part B costs will rise in 2022, which will subtract — at least partly — from the higher benefits. The base premium is now $148.50 a month. I could see that rising to $158 a month, cutting the effect of the COLA increase by $9.50 a month. But this is just speculation.

We won’t know the actual COLA number until 8:30 a.m. EDT on October 13, 2021, when the Bureau of Labor Statistics releases the September inflation report and completes the data needed for the 3rd quarter average of CPI-W. I will be tracking these numbers for July, August and September as each inflation report is issued.

I keep a running total of the CPI-W changes on my Social Security COLA page.

One more thing. One interesting side issue is that a 6% increase in benefits in 2022 could speed up Social Security’s path toward depleting its “trust fund” of accumulated payroll taxes. Once that happens, possibly in the early 2030s, Social Security will need to rely on incoming payroll taxes, which could cover only about 75% of projected benefits. Congress could — and should — address this issue quickly by gradually raising the full retirement age, or raising the income cap on payroll taxes, or taxing 100% — instead of 85% — of Social Security benefits for wealthy beneficiaries. Or some combination. We’ll see.

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Retirement, Social Security | 8 Comments

A new 10-year TIPS will be auctioned Thursday. Anyone interested?

Posted on July 18, 2021 by Tipswatch

Hint: It won’t be a thing of beauty. But investors may snatch it up.

By David Enna, Tipswatch.com

The U.S. Treasury on Thursday will offer $16 billion in a new 10-year Treasury Inflation-Protected Security, CUSIP 91282CCM1. The coupon rate and real yield to maturity will be determined by the auction result.

A TIPS is an investment that pays a coupon rate well below that of other Treasury investments of the same term. But with a TIPS, the principal balance adjusts each month (usually up, but sometimes down) to match the current U.S. inflation rate. So the “real yield to maturity” of a TIPS indicates how much an investor will earn above (or in this case, below) inflation.

This is a new TIPS, and auction results for new issues can be a little more complicated to predict. After all, there will be $16 billion in new supply entering the market. And these TIPS auction amounts have been inching higher as the Treasury requires more borrowing to finance ever-larger U.S. deficits. Here are auction amounts for recent new 10-year issues:

  • July 22, 2021: $16 billion
  • Jan. 21, 2021: $15 billion
  • July 23, 2020: $14 billion
  • Jan. 23, 2020: $14 billion
  • July 18, 2019: $14 billion
  • Jan. 17, 2019: $13 billion

In less than three years, the 10-year auction amounts have increased 23%. At some point, will the offering size grow too large for demand? That’s not likely for now, as the Federal Reserve continues aggressively buying TIPS and other U.S. Treasurys, keeping yields under control.

One thing about Thursday’s auction is certain: The Treasury will set the coupon rate for this TIPS at 0.125%, the lowest it will go for any TIPS.

As of Friday’s market close, the Treasury, on its Real Yields Curve page, was estimating that a full-term 10-year TIPS would have a real yield of -1.02%. That estimate has dropped 15 basis points since July 1. So the yield trend is working against potential investors in this TIPS. And that deeply negative yield — much lower than the coupon rate of 0.125% — will make this TIPS pricey. The adjusted auction price will probably be about $112 for about $100.39 of value, after accrued inflation is added in.

This TIPS will have an inflation index of 1.00387 on the settlement date of July 30. That number, by the way, is a reflection of the extraordinarily high non-seasonally adjusted inflation of 0.80% in May 2021. One month later, in August, the principal balance of this TIPS will adjust 0.93% higher, matching non-seasonally adjusted inflation in June. This two-month inflation trend definitely adds to the appeal of this TIPS.

If CUSIP 91282CCM1 does auction with a real yield to maturity of -1.02%, it will be the lowest yield ever for any 9- to 10-year TIPS auction. The current record low of -0.987% was set in a January 2021 auction.

Here is the trend in 10-year real yields over the last five years, showing the deep decline in the period after March 2020, when the COVID-19 pandemic began exploding across the United States. In mid-March, the Federal Reserve began an aggressive program of bond-buying, which has kept both real and nominal yields at extremely low levels.

Inflation breakeven rate

The Treasury is currently estimating the nominal yield of a full-term 10-year Treasury note at 1.31%, which means that if CUSIP 91282CCM1 auctions with a yield of -1.02%, it will get an inflation breakeven rate of 2.33%. That is well off recent highs for this metric, which hit a one-year high of 2.54% on May 17.

A lower inflation breakeven rate makes this TIPS more attractive versus its nominal alternative, and that should increase investor demand for this offering. It’s just a mathematical calculation. At current yields, this TIPS would greatly outperform a nominal Treasury if official U.S. inflation continues at 3% or higher. Here are the numbers:

Of course, this TIPS would also be a loser if inflation doesn’t maintain at an average of 2.33% for 10 years. Over the last 10 years, inflation has averaged 1.9%, so the market is pricing in higher-than-usual inflation over the next 10 years. My conclusion: I am not at all interested in a nominal 10-year Treasury yielding 1.31%. This new TIPS is at least a bit more intriguing, even if it gets a record low real yield.

Here is the trend in the 10-year inflation breakeven rate over the last five years, showing the lofty surge higher after March 2020, when both the Federal Reserve and Congress launched aggressive economic stimulus programs:

I Bonds remain the better alternative

I always feel the need to mention that U.S. Series I Savings Bonds, which currently can be bought with a permanent fixed rate of 0.0%, are a much better investment than a 10-year TIPS with a real yield of -1.02%. The I Bond has a 102-basis-point yield advantage, earns tax-deferred interest and has much better protection against deflation.

I Bonds have a purchase limit of $10,000 per person per calendar year. So if you are interested in inflation protection, I recommend purchasing I Bonds first, up to the limit, and then consider an investment in a Treasury Inflation-Protected Security.

For investors with a longer investment horizon, EE Bonds are also very attractive in our low-rate environment. They have a fixed rate of 0.1%, but will double in value if held for 20 years, giving them a return of 3.5%. But they have to be held 20 years. If that is reasonable for you, they are a strong investment today. A 20-year nominal Treasury is yielding 1.86%, so the EE Bond has a yield advantage of 164 basis points. EE Bonds also have a separate purchase cap of $10,000 per person per calendar year.

Conclusion

I probably won’t be an investor in this new 10-year TIPS, but I will be watching the Treasury’s Real Yields Curve page to see if yields are surging higher. I can see the appeal for an investor who believes real and nominal yields aren’t likely to rise dramtically in the mid-term future. In fact, if you believe real yields are heading even lower, this TIPS is an attractive investment.

I will be reporting the results soon after the auction closes at 1 p.m. Thursday. Non-competitive bids have to be made before noon.

Here is a history of recent TIPS auctions of this term:

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in I Bond, Investing in TIPS, Savings Bond | 9 Comments