TIPS explained: Treasury Inflation-Protected Securities

By Ken Chigbo, Founder, KenMacro. Published 2026-05-12.

What is TIPS?

TIPS are US Treasury bonds issued by the Treasury Department since 1997. The principal of a TIPS is indexed to the non-seasonally-adjusted CPI-U with a two-month lag. As CPI rises, the principal value of the bond rises, and the fixed coupon rate is applied to the adjusted principal, producing rising dollar coupon payments. TIPS are issued in 5-year, 10-year, and 30-year tenors and trade on the secondary market continuously. The quoted yield on a TIPS is a real yield, the return after expected inflation has been stripped out. The 10-year TIPS yield is the cleanest real-yield benchmark available and is a primary macro input.

How traders use TIPS

Macro traders use TIPS yields as the anchor for real-rate sensitivity in other assets. Gold’s strongest single-driver relationship in 2026 is its inverse correlation with 10-year TIPS yields: gold rises when real yields fall, falls when real yields rise. The relationship is observable on daily timeframes and dominates over weekly and monthly windows. The desk’s gold analysis references the current 10-year TIPS yield in every daily TA. Long-duration equities (NDX in particular) also trade inversely to real yields. The breakeven relationship (nominal Treasury minus TIPS equals inflation expectations) is the other primary use of TIPS yields. Direct TIPS exposure is available through ETFs like TIP and STIP.

Common misconceptions about TIPS

The first misconception is that TIPS protect against all inflation. They protect against headline CPI movements with a two-month lag, but not against unexpected inflation shocks within the lag window or against alternative inflation measures. The second is that TIPS always rise during inflation episodes. TIPS prices fall when real yields rise, even during inflation, because the discount rate effect dominates the principal-indexation benefit. In 2022, TIPS prices fell sharply despite high inflation because real yields rose faster than CPI did. The third is that the TIPS yield equals the true risk-free real rate exactly. Liquidity premia can distort the read, particularly in stress periods.

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Frequently asked

What is the current 10-year TIPS yield?

The current 10-year TIPS yield is published in real time by the US Treasury Department, the Federal Reserve Bank of St Louis FRED database (free, public), and major financial data providers. The KenMacro daily desk read references the current 10-year TIPS yield when discussing gold, the dollar, and long-duration equities.

How are TIPS different from regular Treasuries?

TIPS principal is indexed to CPI with a two-month lag, so the dollar value of the bond rises with inflation. Regular nominal Treasuries pay fixed coupons on a fixed principal. The spread between nominal Treasury yields and TIPS yields equals breakeven inflation, the market’s expected average inflation over the bond’s maturity, plus a small inflation risk premium.

Do TIPS protect against all inflation?

TIPS protect against headline CPI-U movements with a two-month lag, the most widely cited inflation measure. They do not protect against alternative measures (Core PCE, sticky CPI, shadow inflation rates), against unexpected inflation shocks within the lag window, or against episodes where real yields rise faster than nominal CPI. TIPS prices can fall during inflation episodes when real yields rise sharply.

Educational analysis only. Past performance does not guarantee future results. Manage risk against your own portfolio.