20-year TIPS auctioned July 26

[wabmester]

Just a reminder that the next 20-year TIPS auction is tomorrow. They're selling the January issue, so the real coupon is 2-3/8, but the current real yield is closer to 2%, so it will sell for above par tomorrow.

CPI-U for the last 6 months was 2.3%, so you're looking at an annualized nominal yield of around 6.6% this year, but that will of course fluctuate with CPI-U.

FWIW, I put in a small order, but I'm not very excited about 2% real. (Now give me 4% real, and I'll change over to a 100% TIPS portfolio.)

 

[rapoole]

Bought $10K 10 YR TIPS at auction earlier this month. Yield (real) 1.93%. Fees/commission $0.0. Through Fidelity online, zip, nada, zero. I know 1.93% doesn't sound like a lot, but treasuries are a big market, so to the extent markets can be efficient, they are. And inflation increases the principal amount. And fees and commissions of 0 are hard to beat.

I would argue that they should be a part of many (or most) ER portfolios.

rapoole2000

 

[wabmester]

The auction resulted in a real yield of 2.09%.

http://www.publicdebt.treas.gov/of/releases/2005/oft0726051.pdf

 

[Nords]

(Now give me 4% real, and I'll change over to a 100% TIPS portfolio.)

Yeah, right, you and what rate of inflation?

I want to have all my living expenses indexed to CPI-U (except, of course, for our mortgage payments). Then I'll be happy with investments indexed to that hedonically-adjusted index...