TIPS (Treasury Inflation-Protected Securities) Real Yield History
Direct answer: TIPS pay a fixed real yield (above inflation) plus inflation adjustment via CPI. The 10-year TIPS real yield fell to -1.08% in August 2021, meaning investors were willing to accept guaranteed loss of purchasing power to hold U.S. government bonds. Real yields turned positive in 2022 and reached +2.0-2.5% in 2023-2024, the highest since the pre-2008 era, making TIPS more attractive as a real return investment.
10-Year TIPS Real Yield at Selected Dates
| Date | 10-Yr TIPS Real Yield |
|---|---|
| Jan 2003 | 2.25% |
| Jan 2005 | 1.73% |
| Jan 2008 | 1.52% |
| Jan 2009 | 1.63% |
| Jan 2013 | -0.62% |
| Jan 2016 | 0.59% |
| Jan 2020 | 0.10% |
| Aug 2020 (historic low) | -1.08% |
| Jan 2021 | -1.03% |
| Jan 2022 | -0.99% |
| Jun 2022 (turned positive) | 0.59% |
| Jan 2023 | 1.47% |
| Jan 2024 | 1.74% |
| Sep 2024 | 1.72% |
Source: St. Louis Fed FRED: 10-Year TIPS Yield. Last verified: September 2026.
Frequently asked questions
What is a negative real yield and why would anyone accept it?
A negative real yield means you are guaranteed to lose purchasing power by holding the bond. For example, at -1% real yield, $100 in TIPS today becomes approximately $90 in real purchasing power after 10 years (even after inflation adjustment). Investors accepted negative real yields in 2020-2022 because: (1) Treasuries were one of few liquid, government-guaranteed instruments; (2) the alternative (cash, money market funds at 0%) was worse; (3) flight to safety during COVID created enormous demand; (4) Federal Reserve quantitative easing (purchasing $80-120B Treasuries/month) artificially suppressed yields.
How do TIPS compare to nominal Treasuries?
Nominal Treasuries pay a fixed dollar coupon; if inflation rises, real value of coupons erodes. TIPS adjust both principal and coupon for CPI, protecting against unexpected inflation. TIPS are superior when: actual inflation exceeds the breakeven inflation rate (the difference between nominal 10-year yield and 10-year TIPS yield). If the 10-year nominal yield is 4.5% and 10-year TIPS yield is 2.0%, the breakeven rate is 2.5% -- if actual inflation averages above 2.5% over 10 years, TIPS outperform; below 2.5%, nominal Treasuries outperform.
Should I hold TIPS in a taxable or tax-advantaged account?
TIPS are best held in tax-advantaged accounts (IRA, 401k, 403b). The reason: TIPS generate phantom income in taxable accounts -- you pay taxes annually on the inflation adjustment to principal even though you do not receive that cash until maturity or sale. This phantom income creates a negative cash flow in years of high inflation (you owe taxes on income you have not received yet). In a tax-advantaged account, this issue disappears: no annual tax on the inflation adjustment. TIPS ETFs (VTIP, SCHP, TIP) in taxable accounts face the same phantom income problem.