Treasury Inflation-Protected Securities, or TIPS, passed the latest threshold in their dramatic yield rise since the beginning of the year when the 10-year note yield turned positive Monday. The yield has been bouncing around 0%, but the “ask” yield registered at 0.068% around 12:15 p.m., according to Tradeweb.
Monday marks the first time since January 2012 that the 10-year TIPS yield turned positive, Tradeweb data show.
The Treasury Department offers these inflation protected investments as a hedge against rising prices by issuing a principal amount that grows alongside inflation. But TIPS have sold off since the start of the year, pushing yields up from their recent low of -0.913% in December.
TIPS are often compared to regular Treasurys by subtracting the inflation-protected yield from their plain-vanilla counterpart, resulting in what is known as a breakeven rate. That’s the rate of inflation that needs to materialize for TIPS to outperform Treasurys.
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