5 Year TIPS

[Fearchar]

I've been monitoring the yield on 5 year TIPS as part of keeping tabs on the markets.

fred.stlouisfed.org/series/DFII5

Notice that the time series for 5 year TIPS from FRED goes back to January 2003.

Also notice that 5 year TIPS have been negative since March 2020.
However, that has changed dramatically within the past week.

5 year TIPS are now at 0.38%, actually down from 0.73% on Tuesday.
We don't typically experience such violent spikes (the last spike was March 2020.

I've realized for a while that the actions of the FED will propel 5 year TIPS positively.
My impression has been that 5 year TIPS should trade at about 0.5% for and extended period of time.
Not that that is where they will always be, but that 0.5% is entirely reasonable considering the intentions of the FED.

Now the real fireworks was on Monday and today is Friday, but that's how it goes sometimes.

As noted, 5 year TIPs have relaxed from Mon/Tues, but my impression is that we are much nearer where we need to be today than we have been for a while.

[yogibearbull]

For those interested in 5-yr TIPS as substitutes/supplement for I-Bonds, or on their own, some information can be found in the link below. There is an auction this week on Thursday.

ybbpersonalfinance.proboards.com/thread/278/mechanics-buying-selling-yr-tips

[yogibearbull]

For those interested in buying Treasuries at auctions,

26-week and shorter are every week.

Next 1-yr/52-week on 10/4/22 (Tu), 11/1/22 (Tu), etc

Next 2-year on 9/26/22 (M), 10/25/22 (Tu), etc

Next 5-year TIPS on 10/20/22 (Th), 12/22/22 (Th), etc

Orders can be entered only after the related announcements are out until the early-AM on the auction day.

Treasuries can be bought in the secondary market anytime, although these make more sense when there are no nearby auctions. Note that there is bid-ask, and one buys at "ask", sells at "bid".

home.treasury.gov/system/files/221/TentativeAuctionScheduleQ32022.pdf

[FD1000]

Jun 17, 2022 10:44:41 GMT Fearchar said:

I've been monitoring the yield on 5 year TIPS as part of keeping tabs on the markets.

fred.stlouisfed.org/series/DFII5

Notice that the time series for 5 year TIPS from FRED goes back to January 2003.

Also notice that 5 year TIPS have been negative since March 2020.
However, that has changed dramatically within the past week.

5 year TIPS are now at 0.38%, actually down from 0.73% on Tuesday.
We don't typically experience such violent spikes (the last spike was March 2020.

I've realized for a while that the actions of the FED will propel 5 year TIPS positively.
My impression has been that 5 year TIPS should trade at about 0.5% for and extended period of time.
Not that that is where they will always be, but that 0.5% is entirely reasonable considering the intentions of the FED.

Now the real fireworks was on Monday and today is Friday, but that's how it goes sometimes.

As noted, 5 year TIPs have relaxed from Mon/Tues, but my impression is that we are much nearer where we need to be today than we have been for a while.

I'm trying to understand the above. 
TIP is an ETF with duration=7.  YTD: TIP lost about 10% and the chart show a "nice" downturn

Do you think NOW is a good time to buy TIP? If not, when is it a good time?

Attachments:

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Sept 18, 2022 22:56:10 GMT FD1000 said:

Jun 17, 2022 10:44:41 GMT Fearchar said:

I've been monitoring the yield on 5 year TIPS as part of keeping tabs on the markets.

fred.stlouisfed.org/series/DFII5

Notice that the time series for 5 year TIPS from FRED goes back to January 2003.

Also notice that 5 year TIPS have been negative since March 2020.
However, that has changed dramatically within the past week.

5 year TIPS are now at 0.38%, actually down from 0.73% on Tuesday.
We don't typically experience such violent spikes (the last spike was March 2020.

I've realized for a while that the actions of the FED will propel 5 year TIPS positively.
My impression has been that 5 year TIPS should trade at about 0.5% for and extended period of time.
Not that that is where they will always be, but that 0.5% is entirely reasonable considering the intentions of the FED.

Now the real fireworks was on Monday and today is Friday, but that's how it goes sometimes.

As noted, 5 year TIPs have relaxed from Mon/Tues, but my impression is that we are much nearer where we need to be today than we have been for a while.

I'm trying to understand the above. 
TIP is an ETF with duration=7.  YTD: TIP lost about 10% and the chart show a "nice" downturn

Do you think NOW is a good time to buy TIP? If not, when is it a good time?


He is posting about individual TIPS not the ETF. I believe the time to buy them is before they are needed.

[yogibearbull]

Individual TIPS held to maturity (at brokerages or Treasury Direct) should follow the CPI ($$CPI) less the premium/discount at purchase. TIPS mutual funds have many other drivers; in the chart, ST STIP and VTIP are almost indistinguishable; IT/LT TIP is the worst.

LINK $$CPI STIP VTIP TIP