The Economy & the Fed

TIPS (Treasury Inflation-Protected Securities)

US government bonds built to protect against inflation. Their principal — the amount the bond is worth — is adjusted up with the Consumer Price Index (CPI-U) as prices rise, and down if prices fall. The interest rate is fixed, but because it is paid on the adjusted principal, the interest payments grow with inflation too. At maturity the investor receives the adjusted principal or the original amount, whichever is higher. The gap between a regular Treasury’s yield and a TIPS yield of the same length, called the breakeven rate, shows how much inflation the market expects.

Educational information, not investment advice. See it applied across the screener →