The Fed’s preferred measure of current inflation, a gauge tied to consumer spending, was 1.8 percent in May, up from 1.6 percent the previous month.
TIPS of all maturities have returned 6.8 percent in 2014 after losing 9.4 percent last year, according to Bank of America Merrill Lynch bond indexes. Conventional Treasuries have gained 3.5 percent this year after falling 3.4 percent in 2013 amid a rally in higher-risk assets, the indexes show.
Fed Indicator
A Fed inflation indicator for the period from 2019 to 2023, known as the five-year, five-year forward break-even rate, was at 2.46 percentage points on July 21, the most recent figure available, according to data compiled by Bloomberg. The gauge has climbed from this year’s low of 2.38 percentage points, reached on March 21. It touched a 2014 high of 2.68 percentage points in January.
The measure ranged between 2.33 percentage points and 2.89 percentage points in 2013. It averaged 2.73 percentage points for the past five years.
The U.S. 10-year break-even rate, the gap between yields on 10-year notes and comparable TIPS that signals trader expectations for inflation over the life of the debt, was 2.24 percentage points today, compared with an average 2.19 percentage points over the past five years.
The Treasury said today it will auction $29 billion in two- year notes on July 28, $35 billion in five-year notes on July 29 and $29 billion in seven-year notes on July 30. It will also sell $15 billion in two-year floating-rate debt on July 30.