Where to find current TIPS rates?

[Gearhead Jim]

I'm considering some TIPS, and can look in Treasury Direct to find the coupon on recent auctions. But I expect that the price of TIPS already in circulation varies- is there a website where I can find both the coupon and selling price of "used" TIPS?

Previous threads suggest that a coupon of 2.5% is a rough gauge of when TIPS become a better value than ordinary Treasuries, but your comments are welcome on that part, too.

 

[d]

http://screen.yahoo.com/bonds.html

 

[brewer12345]

Here you go: http://www.bloomberg.com/markets/rates/index.html

2.4 to 2.5% depending on the maturity.  Interestingly, the TIPS curve is inverted, too.

 

[retire@40]

I'm not a bond person and don't know much about them, but I found this T-bond: http://tinyurl.com/jzpk5

Is this bond available to buy now and is the current yield really 10.894%?

 

[Gearhead Jim]

"There are two kinds of economists- those who know they can't predict interest rates, and those who don't know they can't predict interest rates."

Having quoted that, can someone comment on what the real yield on TIPS has been over the previous 10 years, whether you expect it to go up or down, and what will cause it to do so?

Also, how do you set up a TIPS IRA?

 

[d]

assuming the TIPS were bought at par and held to maturity, the real yield would be the stated coupon --that's the advantage of TIPS!

Is this bond available to buy now and is the current yield really 10.894%?

do note that it's callable, and it likely will be

 

[wabmester]

can someone comment on what the real yield on TIPS has been over the previous 10 years

It has ranged from about 4% when first issued about 10 years ago to around 1% when Greenspan was having his big liquidity party in 2003.

whether you expect it to go up or down, and what will cause it to do so?

The yield curve is pretty flat from the 5-year to the 20-year, so that tells you that the market doesn't expect much change.   The real yield is pretty much a function of supply and demand.   Currently, the real yield is right about the 50-year average for treasuries -- not a bargain, but better than a sharp stick in the eye.

Also, how do you set up a TIPS IRA?

You just pick a broker to be your IRA custodian and buy the bonds in that account.   I use Vanguard, and they don't charge a fee for bonds purchased via treasury auction if you have a Flagship account with them.

 

[JohnEyles]

do note that it's callable, and it likely will be

But there are a bunch there which aren't.  Go to screen.yahoo.com/bonds.html,
search for 'Treasury' and 'Coupon range' minumum is 8%.

Seems to good to be true, what gives ?

 

[haha]

Possibly you are neglecting to amortize a premium to par?

Ha

 

[d]

Seems to good to be true, what gives ?

forget the coupon, look at yield to maturity

 

[retire@40]

forget the coupon, look at yield to maturity

Yield to Maturity (%): 9.242 on the bond I posted above. How do I buy in?

 

[haha]

Yield to Maturity (%): 9.242 on the bond I posted above.  How do I buy in?

I looked at your link. The fly in the ointment here is the call. You need to either forget it, or look very carefully at the terms of the call.

For example, if is callable now at par, you would lose an immediate 20% or so. This is not likely to be the case, but it illustrates the problem.

Learn about it, or get a mutual fund.

Ha

 

[wabmester]

Yield to Maturity (%): 9.242 on the bond I posted above.  How do I buy in?

Talk to the bond desk at your broker. As others have mentioned, in May 2009, you'll learn what "callable" means.

 

[saluki9]

Yield to Maturity (%): 9.242 on the bond I posted above. How do I buy in?

YTM doesn't mean anything on a bond like that. Look at the yield to call (YTC) or Yield to Worst (YTW)

 

[retire@40]

Those last few points clear things up. Thanks.

I guess the problem is that whomever designed the Yahoo Bond Center forgot to include some vital stats such as the call date and the yield-to-call. I won't be bookmarking that site to use for a bond screener.

Now I know why it was too good to be true.

 

[d]

Now I know why it was too good to be true

... as it always is in the capital markets ... and in most other aspects of life!