A lot has changed since December, when I declared that month's five-year TIPS reopening auction "a screaming buy." That auction generated a real yield of 1.129%, the highest for any auction for this term since April 2009.
The screaming is over, folks. In just four months, real yields (meaning yields above inflation) have declined sharply. The U.S. Treasury on Friday estimated that a full-term five-year TIPS would have a real yield of 0.52%, down a remarkable 61 basis points since that December auction.
Thursday, the Treasury is creating a new five-year Treasury