Thursday, February 17, 2011

30-Year TIPS Auction Results


High Yield: 2.190%

It was a very lonely auction for me as a retail investor. I represented 0.17% of the noncompetitive bids (1/584th).

You won't see me complaining though.

Here's a chart comparing the current real yield (adjusted for inflation) of the 30-Year TIPS to the historical real yield of 3-month treasury bills held for 1 year (reinvested 3 times). I've also added the average real yield on the treasury bills and a 5-year moving average.

Click to enlarge.

I'm basically locking in a relatively good long-term rate. Over the next 30 years I expect to significantly outperform money parked in 3-month treasury bills. I don't claim this is safe. I might be wrong. I don't think anything is safe these days. With that in mind, look what World War II did to real yields though.

See Also:
30-Year TIPS Auction Announced

Source Data:
FRB: Selected Interest Rates
St. Louis Fed: CPI-U


Stagflationary Mark said...

It is also worth noting that the 1980s and 1990s were not typical.

AllanF said...

Congratulations Mark.

May you live long enough to blow your principle in a reckless fashion sure to set-off an hour of fevered Keynesian ranting from a wizened, lonely, and totally discredited Paul Krugman.

Stagflationary Mark said...



You've got me a bit worried though. What if Krugman is discredited tomorrrow? Does that mean I'll lose everything overnight! ;)

getyourselfconnected said...

Krugman is not discredited???? LOLz