Comments on: TIPS rates jump to levels not seen for six years http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/ Tue, 07 Sep 2010 20:19:22 +0000 http://wordpress.org/?v=2.0.4 by: Tom Adams http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53739 Wed, 23 Dec 2009 21:48:24 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53739 Suhail - yes, that's what I was looking for! So back to Rick's question, you can use Suhail's link to see what you might get for your TIPS today. Bond prices have funny quotes - they look like they're around $100, but the bonds actually sell in $1,000 units, so you have to move the decimal point in the price one place to the right to see what you'd get. In general, you paid about $1,000 for each $1,000 TIPS, although it's never exactly $1,000 - could be a little more or a little less. Tom Adams Suhail - yes, that's what I was looking for! So back to Rick's question, you can use Suhail's link to see what you might get for your TIPS today. Bond prices have funny quotes - they look like they're around $100, but the bonds actually sell in $1,000 units, so you have to move the decimal point in the price one place to the right to see what you'd get.

In general, you paid about $1,000 for each $1,000 TIPS, although it's never exactly $1,000 - could be a little more or a little less.

Tom Adams

]]> by: Suhail http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53715 Tue, 22 Dec 2009 18:02:09 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53715 Tom, I was able to get bid/ask for TIPs securities from the WSJ site. Here's a link. http://tinyurl.com/35xsoy Suhail Tom,

I was able to get bid/ask for TIPs securities from the WSJ site. Here's a link.

http://tinyurl.com/35xsoy

Suhail

]]> by: Tom Adams http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53710 Tue, 22 Dec 2009 15:07:52 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53710 Suhail - that link is much better than nothing at all, but I was really looking for something that listed each individual issue of TIPS by CUSIP number and gave the current bid/ask prices. That level of detail can be found for stocks in thousands of places. Why not for bonds? Tom Adams Suhail - that link is much better than nothing at all, but I was really looking for something that listed each individual issue of TIPS by CUSIP number and gave the current bid/ask prices.

That level of detail can be found for stocks in thousands of places. Why not for bonds?

Tom Adams

]]> by: Suhail http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53478 Fri, 18 Dec 2009 17:45:17 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-53478 Tom, I use Bloomberg to get quoted on Bond rates & to check the yield curve. http://www.bloomberg.com/markets/rates/index.html Tom,

I use Bloomberg to get quoted on Bond rates & to check the yield curve.

http://www.bloomberg.com/markets/rates/index.html

]]> by: Tom Adams http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-48567 Thu, 24 Sep 2009 14:48:44 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-48567 Rick - The "redemption value" of TIPS changes every day based on two things - the underlying inflation-adjusted value of the bond and today's market-based interest rates. The Treasury actually publishes index numbers each month (<a href="http://www.treasurydirect.gov/instit/annceresult/tipscpi/tipscpi_pr_cpi102009.htm" rel="nofollow">here's the most recent</a>) that are used to calculate the underlying value of each individual TIPS issue. This is the value that interest is calculated with, using the "coupon rate" of the bond. That's the interest rate that you see in the description of the bond. But if your coupon rate is 3% and in the open market the rate for that maturity of TIPS is 2%, people would rather have your 3% bond than a 2% bond, and they'll pay more for it. Likewise, if yours has a 1% coupon and the market rate is 2%, they'll pay less for it. So the answer to your question is basically that it's hard to say what you'd get back. It depends on both the rate and direction of inflation after you invest, and the direction of interest rates. There is no way I know of for the general public to look up trading prices of bonds, even though stock quotes are everywhere. (If any readers know of a source for bond prices, please leave a link in a comment). Tom Adams Rick - The "redemption value" of TIPS changes every day based on two things - the underlying inflation-adjusted value of the bond and today's market-based interest rates.

The Treasury actually publishes index numbers each month (here's the most recent) that are used to calculate the underlying value of each individual TIPS issue. This is the value that interest is calculated with, using the "coupon rate" of the bond. That's the interest rate that you see in the description of the bond.

But if your coupon rate is 3% and in the open market the rate for that maturity of TIPS is 2%, people would rather have your 3% bond than a 2% bond, and they'll pay more for it. Likewise, if yours has a 1% coupon and the market rate is 2%, they'll pay less for it.

So the answer to your question is basically that it's hard to say what you'd get back. It depends on both the rate and direction of inflation after you invest, and the direction of interest rates. There is no way I know of for the general public to look up trading prices of bonds, even though stock quotes are everywhere. (If any readers know of a source for bond prices, please leave a link in a comment).

Tom Adams

]]> by: Rick http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-48524 Wed, 23 Sep 2009 21:39:09 +0000 http://www.savings-bond-advisor.com/tips-rates-jump-to-levels-not-seen-for-six-years/#comment-48524 Hi Tom. If I purchased TIPS from Treasury Direct but I opted to sell them in the secondary market through Treasury Direct before they matured, Treasury Direct will charge a fee for this service. But just how much could I expect to get back minus the service fee using this transaction? Hi Tom. If I purchased TIPS from Treasury Direct but I opted to sell them in the secondary market through Treasury Direct before they matured, Treasury Direct will charge a fee for this service. But just how much could I expect to get back minus the service fee using this transaction?

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