Five-year TIPS yield hits highest in about a month as traders boost odds of 75 basis point hike in September


Updates to correct date.

The five-year TIPS, or inflation-adjusted, yield hit its highest level in about a month, rising to 0.362% Wednesday morning, according to Tradeweb data. The 10- and 30-year real yields also moved higher, to 0.411% and 0.935%, respectively; that’s up from their closing levels on Monday and Tuesday. The moves come as traders boosted the likelihood of a 75 basis point hike by the Federal Reserve in September, to more than 50%. Rising real yields are “consistent with investors renewed confidence in the Fed’s willingness and ability to do whatever is necessary to contain inflation expectations,” BMO Capital Markets strategists Ian Lyngen and Ben Jeffery wrote in a note. That includes, but is not limited to, “hiking well into restrictive territory and eroding demand to the point of a significant economic slowdown,” they said.

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