The yield on U.S. 30-year Treasury Inflation-Protected Securities (TIPS) is approaching 2%, which would be the first time in more than a decade if it breaks. Bond investors waited with bated breath to see if it would get there, and where it would stop if it did.
Given that the Federal Reserve has raised interest rates by more than 500 basis points in the past 18 months, some people would think that the "real yield" of 2% is already very worth buying. Others argue that uncertainty about whether inflation has peaked, combined with the U.S. government's growing need to borrow, means long-term yields of all types may still have to rise.
The last time the 30-year TIPS real yield topped 2% was in 2011. Since then, that yield has fallen to around -0.50% in 2020 and 2021 as the Fed slashed rates and demand for inflation protection soared.
