TIIS


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TIIS

Treasury Inflation-Protected Security

A U.S. Treasury security that protects the bondholder from inflation. Most Treasury securities, like most fixed dollar obligations, pay a fixed coupon rate periodically and mature at par. While this carries low risk, it exposes investors to the possibility that the inflation rate will outpace the interest rate represented on the coupon. In order to protect against this, a Treasury Inflation-Protected Security automatically increases its principal according to the inflation rate as tracked by the Consumer Price Index. Thus, while the coupon rate does not increase, the dollar amount paid does. Because TIPS are so safe, they offer a very low rate of return. See also: Real Return Bond.
References in periodicals archive ?
Nevertheless, if one is willing to assume that the sum of these premiums is relatively stable over time, marked changes in the TIIS spread should reflect changes in market participants' expectations of inflation.
From an investor's point of view, the possibility of investing in securities providing a real interest rate seems valuable: investment value is protected from erosion due to inflation and because of diversification purposes (low correlation between TIIS and nominal securities).
* This study attributes this "valuation puzzle" to several factors: investor difficulty adjusting to a new asset class, divergent supply trends between TIIS and nominal Treasuries, and the lower liquidity of TIIS.
Why might the return on TIIS be so perplexingly high compared to securities that pay a nominal yield?
Although day-to-day changes in TIIS yields-to-maturity appear to be influenced strongly by institutional and trading features of the market, month-to-month changes appear to be driven by macroeconomic factors.
The chart at the lower left takes a common callable bond, the 30-year Government National Mortgage Association bond, and subtracts, as an estimate of inflation, the yield difference between a 10-year Treasury bond and a 10-year TIIS. Both the 10-year TIIS rate and the Option-adjusted rate (dubbed the "Berk rate," after the economist who developed these ideas) have been increasing lately, but the Berk rate has risen nearly 80 bp since early June, compared with the TIIS's 60 bp rise.
It's about time na bumalik ako sa gym.' (Tiis ganda naman.)
Treasury inflation-indexed securities (TIIS) adjust their principal and interest for inflation, giving a direct measure of real rates.
"Konting tiis lang (Just bear with it a little bit more).
Gary de Ocampo, chief executive of Kantar Philippines, says 40 percent self-medicate, while 50 percent simply endure the sickness (tiis, in Filipino parlance) hoping it will go away on its own.
Another way to gauge long-term inflation expectations is by subtracting the yield on 10-year Treasury inflation-indexed securities (TIIS), a signal of the real rate of interest, from the 10-year Treasury bill.
"EMRQ: An Efficient Multikeyword Range Query Scheme in Smart Grid Auction Market," TIIS, vol.