Treasury Inflation-Protected Securities (TIPS)

QUOTE AND NEWS
MarketWatch  Jun 19  Comment 
The Treasury Department sold $7 billion in 30-year Treasury inflation-protected securities Thursday at a yield of 1.116%, the lowest since February 2013. Bidders offered to buy 2.76 times the amount of debt sold, compared to an average of 2.59...
SeekingAlpha  Jun 4  Comment 
By Calafia Beach Pundit: The introduction of TIPS (Treasury Inflation Protected Securities) in 1997 was an important milestone for financial markets. For the first time ever, TIPS gave us the ability to see real interest rates in real time....
TheStreet.com  May 29  Comment 
NEW YORK (Fabian Capital Management) -- Treasury Inflation-Protected Securities, or TIPS, are an interesting subset of Treasury bonds designed to protect your purchasing power from the effects of rising consumer prices. However, many investors...
MarketWatch  Mar 20  Comment 
The Treasury Department sold $13 billion in 10-year Treasury inflation-protected securities Thursday at a yield of 0.659%. Bidders offered to buy 2.48 times the amount of debt sold, compared to an average of 2.50 times at the last six sales....
Wall Street Journal  Mar 7  Comment 
Funds that invest in Treasury inflation-protected securities, or TIPS, took in the largest weekly inflow since May 2012, reversing outflows that started last April.
MarketWatch  Feb 20  Comment 
The Treasury Department sold $9 billion in 30-year Treasury inflation-protected securities Thursday at a yield of 1.495%. Bidders offered to buy 2.34 times the amount of debt sold, compared to an average of 2.61 times at the last six sales....
MarketWatch  Jan 23  Comment 
The Treasury Department sold $15 billion in 10-year Treasury inflation-protected securities Thursday at a yield of 0.661%. Bidders offered to buy 2.31 times the amount of debt sold, compared to an average of 2.56 times at the last six sales, and...
MarketWatch  Dec 19  Comment 
The Treasury Department sold $16 billion in 5-year Treasury inflation-protected securities Thursday at a yield of negative 0.375%. Bidders offered to buy 2.54 times the amount of debt sold, compared to an average of 2.63 times at the last six...
MarketWatch  Nov 21  Comment 
The Treasury Department sold $13 billion in 10-year Treasury inflation-protected securities Thursday at a yield of 0.560%. Bidders offered to buy 2.59 times the amount of debt sold, compared to an average of 2.55 times at the last six sales....
MarketWatch  Oct 24  Comment 
The Treasury Department sold $7 billion in 30-year Treasury inflation-protected securities Thursday at a yield of 1.33%. Bidders offered to buy 2.76 times the amount of debt sold, compared to an average of 2.66 times at the last six sales....




 
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Treasury Inflation-Protected Securities, or TIPS, are bonds issued by the US Treasury which provide investors with protection against inflation. They are offered in maturities of 5, 10 and 20 years.

The principal on these securities are adjusted based on the Consumer Price Index, which is a measure of inflation. For example: Suppose inflation rate is 2%. If an investor bought TIPS worth $1000 and held it for a year, his principal would have grown by 2% to $1020.

Upon maturity, the TIPS pay back the adjusted principal or the original principal, whichever is greater. TIPS also pay interest twice a year at a fixed rate. However, the interest is paid on the adjusted principal, and as a result increases with inflation and decreases with deflation.[1]

TIPS are useful in determining the expected inflation. The difference between the yield of normal Treasury bonds and the yield of TIPS is a good indicator of the market's inflation expectation.

TIPS can be bought from Treasury Direct.

References

  1. TreasuryDirect.gov, Retrieved November 17, 2008

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