For me, definitely. But it’s a personal decision.
By David Enna, Tipswatch.com
Something unique is coming this week: The first-ever Treasury Inflation-Protected Security to mature in the year 2036. For that reason, and the fact that real yields remain attractive, I will be a buyer.
This is CUSIP 91282CPU9, a new 10-year TIPS that will auction Thursday. The coupon rate and real yield to maturity will be determined by the auction results. I have targeted this TIPS for a long time as the 2036 addition to my ladder of TIPS investments that stretches to 2043.
No TIPS were ever issued with maturities in years 2036 to 2039 for two reasons: 1) the Treasury stopped issuing 20-year TIPS in November 2009 and 2) the 30-year TIPS auctions were halted from October 2001 to February 2010. That left investors with gap years.
As a compulsive ladder builder, I want to fill those 2036 to 2039 years and I have set up my traditional IRA to allow purchases in January 2026 to 2029 — as long as real yields remain attractive.
This January auction size, by the way, is $21 billion, up from $20 billion for a matching auction in January 2025, but holding steady with the size of the new TIPS issued in July 2025. This marks a break in the Treasury’s recent practice of raising the size of its January TIPS auction.
Real yields
At this point, the 10-year real yield is about 1.91%, according to the Treasury’s yield curve estimates. However, the most recent 10-year TIPS trading on the secondary market closed Friday at 1.88%, so we have a bit of fuzziness.
The Treasury market was shaken last week with news that the Justice Department served Federal Reserve Chairman Jerome Powell with subpoenas in an apparent criminal probe. Powell responded with a strong statement criticizing the action as threatening Fed independence.
My initial reaction was that this kind of controversy should cause inflation expectations to rise, since an independent Fed has a key role in controlling inflation. While it might not seem logical, when inflation expectations rise, the real yield of a TIPS is likely to fall, at least compared to a nominal Treasury of the same term.
And that is what happened in the last week:
The Treasury’s estimate of the real yield of a 10-year TIPS rose only 1 basis point over the last week, while the nominal yield of a 10-year Treasury note rose 6 basis points. This isn’t a huge deal, but does indicate that real yields could continue shifting this week. (The bond market will be closed Monday for Martin Luther King Jr. Day.)
So far, I’d say the market isn’t pricing in a threat to Fed independence. But investors interested in this auction should watch real yield trends through the week.
Definition: The “real yield to maturity” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 1.91% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 1.91% for 10 years.
Is an above-inflation yield around 1.90% attractive? Yes, historically. Of course, we can’t predict where real yields will be heading into the future. They could be much higher if U.S. deficits continue to soar and the world loses trust in the U.S. dollar. Here is the trend in the 10-year real yield over the last 16 years:
Pricing
Since this is a new TIPS, its coupon rate will be set to the one-eighths mark below the auctioned real yield. (For example, a real yield of 1.90% would result in a coupon rate of 1.875%.)
For that reason, the unadjusted auction price will be slightly below par value and investors will get the TIPS at a discount. Plus, this TIPS will carry an inflation index of 0.99779 on the settlement date of January 30. That guarantees the investor will get a discounted price, but also get less than par value of principal as of January 30.
For example, a $10,000 par value investment will be priced slightly below $10,000, but the investor will be getting only $9,977.90 of principal on the settlement date. My reaction: No big deal, but no one should be surprised.
If you find all this confusing, read this: Q&A on TIPS
Inflation breakeven rate
As I noted above, the Treasury’s estimate of the nominal yield of a 10-year Treasury note closed Friday at 4.24%. If you assume this new TIPS will get a real yield of 1.91%, its inflation-breakeven rate would be 2.33%, as things stand today. That is more or less in line with recent auctions.
Historically, an inflation-breakeven rate of 2.33% is high, and it indicates that the nominal Treasury at 4.24% may also be a fair investment. I favor the TIPS because it provides protection against future unexpected inflation. Also, consider that inflation over the last 10 years has averaged 3.2%, through December 2025.
Here is the trend in the 10-year inflation-breakeven rate over the last 16 years, showing remarkable stability since late 2021 in the 2.2% to 2.4% range:
Auction thoughts
It’s impossible to predict demand for inflation-protected investments at a time when inflation reporting is being questioned and the independence of the Federal Reserve may be at risk. My view is that TIPS should get a bit of a “risk premium,” meaning slightly higher real yields. So far, that’s not happening.
I will be investing in this new TIPS unless real yields fall off in the next week. I could purchase CUSIP 91282CPU9 later in the year, easily, and possibly get a better yield at some point. Again, no big deal for my overall investment strategy. A real yield of around 1.90%, or even a little less, will be fine.
If you want to track this potential investment, you can use the Treasury’s Yield Curve estimates, which are posted at the market close each day. This is an estimate of the yield of a full-term TIPS at par value. The estimate will be close, but not perfect, and things can change on the day of the auction.
You can also monitor Bloomberg’s Treasury Yields page to see real-time updates of secondary market trading in the most recent 10-year TIPS. Consider this a rough guide; the auction result often varies.
This TIPS auction closes Thursday at 1 p.m. EST. Non-competitive bids at TreasuryDirect must be placed by noon Thursday. If you are putting an order in through a brokerage, make sure to place your order Wednesday or very early Thursday, because brokers cut off auction orders before the noon deadline.
I will be posting the auction results soon after the close on Thursday. Here is a history of auction results for this term over the last 5 years:
• Confused by TIPS? Read my Q&A on TIPS
• TIPS in depth: Understand the language
• TIPS on the secondary market: Things to consider
• TIPS investor: Don’t over-think the threat of deflation
• Upcoming schedule of TIPS auctions
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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
