NEW YORK, June 24 Yields on U.S. five-year
Treasuries Inflation-Protected Securities (TIPS), also known as
Treasuries real yields, turned flat on Monday and
briefly traded above zero for the first time since February
2011, according to data by TradeWeb.
TIPS, which are less liquid than other U.S. government debt,
have been amongst the worst performers since Federal Reserve
chairman Ben Bernanke said in May that the U.S. central bank is
likely to begin paring back its bond purchases if economic
Bernanke's comments after last week's Fed policy meeting on
Wednesday that the Fed expects the economy will be strong enough
to start reducing purchases this year have added to the rout,
causing a broad selloff that has sent TIPS yields spiraling.
Yields on the five-year TIPS were around negative -0.80
percent before last Wednesday's Fed meeting, and were minus 1.75
percent at the beginning of April.
Concern about inflation had pushed the yields into negative
territory as investors bet that the Fed's bond purchase program
would spur inflation, increasing demand for inflation-linked
A negative yield meant that a borrower paid less than the
rate of inflation to issue debt. This was meant to encourage
borrowing to help stimulate the economy.