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!