10-year TIPS auction yield is -0.046%

Thursday, January 19th, 2012
Categorized as: Savings Bond FAQ

Today the 10-year TIPS rate at auction dipped below zero for the first time since 10-year TIPS were introduced in February 1997. This is the rate those who buy TIPS through TreasuryDirect receive.

The daily rate for existing 10-year TIPS bought and sold by brokers dipped below zero for the first time last August, but this is the first time this has happened for new 10-year TIPS at auction.

Typically the Treasury has tried to keep the fixed rate on Series I bonds about 100 basis points (1 percentage point) less than the fixed rate on 10-year TIPS. However, since the I bond fixed rate can’t go below zero and the fixed rate for TIPS can, the spread is now -4.6 basis points.

This also means that today I bonds were a better deal than TIPS at TreasuryDirect. While the zero percent fixed rate on I bonds isn’t pretty, at least it’s not negative!

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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