10Y TIPS Yields Positive for the first time since 2012

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.

MarketWatch

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu