Last week, Thursday April 21st the Treasury Department sold an astonishing $14 Billion of 5-year Treasury Inflation Protected Securities at a yield of negative 0.18%. But since the government has place a minimum floor yield of 0.125% resulting in a yield gap between regular 5-year Treasury and the 5-year TIPS to be approximately 2.35% supporting the expectation that higher inflation is in cards. So with TIPS potentially paying higher yields as inflation fears increase the usual payoff comes as the 0.125% as is added to the CPI index. Below is a chart of the Barclays TIPS bond Fund index compared to the % gain of the S&P500.
