TIPs pay positive yield, inflation premia are low, U.S. mortgage rates trend down

Genevieve Signoret

Fixed Income

• The yield on TIPs maturing five years from now has finally turned positive—barely (0.23%).
• Bond investors are demanding a mere 141bp premium to buy non-inflation-protected bonds maturing five years from now.
• U.S. 30y mortgage lending rates are trending down in absolute terms, trending down in terms of their spread over yields on comparable USTs.

The yield on TIPs maturing five years from now has finally turned positive—barely (0.23%)

Bond investors are demanding a mere 141bp premium to buy non-inflation-protected bonds maturing five years from now

U.S. 30y mortgage lending rates are falling in absolute terms,…

…although their spreads over yields on 30y USTs are trending up.