Bonds
Inflation-Protected Bonds (TIPS)
Treasuries whose principal moves with the consumer price index. The quoted yield is a real yield — what you earn on top of inflation, whatever inflation turns out to be.
Data as of Aug 21, 2026.
A TIPS starts life like an ordinary Treasury note, then its principal is adjusted for changes in the consumer price index. The coupon rate is fixed, but it is applied to the adjusted principal, so both the dollars you receive each period and the amount repaid at maturity move with the index.
That is why the yield quoted on a TIPS is a real yield. A nominal Treasury promises a number of dollars; a TIPS promises a number of dollars' worth of purchasing power, plus the real yield on top.
The gap between the nominal Treasury yield and the TIPS real yield of the same maturity is the breakeven inflation rate — the inflation rate at which the two would deliver the same result. It is the market's implied expectation, not a forecast anyone is guaranteeing.
An ordinary bond pays you a fixed number of dollars. A TIPS pays you a fixed amount above inflation, so if prices rise faster than expected your payments rise with them.
At a glance
Issuer, backing, term and how the cash actually reaches you.
Who issues them
The US Department of the Treasury, at auction, on the same full faith and credit basis as any other Treasury security.
What backs them
The federal government, and a contractual index formula. Principal is adjusted to non-seasonally-adjusted CPI-U with a set lag, so the adjustment is mechanical rather than discretionary.
Typical maturities
Five, ten and thirty years at issue, with reopenings in between. Funds cluster into broad-maturity and short-maturity versions, and the short ones behave very differently.
How you get paid
A fixed real coupon rate applied semi-annually to the inflation-adjusted principal. At maturity you receive the greater of the adjusted principal or the original principal — a deflation floor on the amount repaid.
What it pays right now
Live series from our rates table, each labelled with what it measures, who published it and when. Index and benchmark levels, not the price of a specific bond.
In text, the series shown below currently read: 10-year TIPS (real yield) at 2.40%; 10-year Treasury at 4.74%. These rows are quoted on more than one basis, so they are listed rather than ranked — the Basis column says which convention each one uses. Each row carries the basis it is quoted on and the exact series that supplies it.
Three things to know before you read a number in this table. Each row is a published series, not a bond for sale — several of these are averages across hundreds of bonds, and an average is not a price anyone will fill you at. The Basis column says what each row measures, and rows measured differently are not comparable with one another however close the numbers look. And the Observed column dates the reading: NOT CURRENT means the publisher is overdue and the figure shown is the last one they released, not today's. The note under the table says which rows belong to this category and which are here only as a benchmark to measure it against.
| Series | LatestThe most recent published reading. Percent per year, unless the basis says points. | Change | BasisWhat the number measures. Two rows on different bases cannot be compared. | Provider · series | Observed |
|---|---|---|---|---|---|
| 10-year TIPS (real yield) | 2.40% | +0.05 pts | Real (after-inflation) constant-maturity yield | US Treasury via FRED · DFII10 | Aug 21, 2026 |
| 10-year Treasury | 4.74% | +0.05 pts | Constant-maturity yield | US Treasury via FRED · DGS10 | Aug 21, 2026 |
The 10-year TIPS real yield (FRED DFII10) beside the 10-year nominal constant-maturity Treasury yield (FRED DGS10), both compiled by the US Treasury. These two are quoted on different bases on purpose: one is a yield after inflation, the other includes whatever inflation compensation the market is demanding. The difference between them is the 10-year breakeven inflation rate, and it is the only sense in which they should be compared.
Subtract the 10-year TIPS real yield (FRED DFII10) from the 10-year nominal constant-maturity Treasury yield (FRED DGS10) above and you get 2.34 percentage points. That is the inflation rate at which holding the nominal bond and holding the TIPS would produce the same outcome over ten years. It is arithmetic on the two figures shown — the market's implied expectation, not a forecast and not a guarantee.
How the income is taxed
US federal and state treatment. Rules change; this is the structure, not tax advice.
Why this section sits between the rates and the risks rather than at the end: two bonds quoting the same number do not pay you the same amount. Bond interest is generally taxed as ordinary income federally, at your own marginal rate, and what differs between the families is whether your state also taxes it and whether any federal exemption applies. A headline yield is a before-tax figure everywhere on this site, so the comparison that matters to you is the one made after the paragraphs below.
The upward principal adjustment is treated as original issue discount and is taxable income in the year it accrues. Investors call it phantom income because the tax is due before the money is received.
Like other Treasury interest, both the coupon and the adjustment are exempt from state and local income tax.
A fund wrapper changes the mechanics but not the substance: the fund distributes the accrual as income, so the cash and the tax line up better, at the cost of the fund never maturing.
Funds that hold these
Exchange-traded funds in our universe tagged to this category, sorted by trailing 12-month distribution yield.
4 funds tagged to this category are listed below. Trailing twelve-month distribution yields run from 4.14% on VTIP to 5.35% on STIP, with a median of 4.97% across the 4 funds that have paid a distribution in the past year. Every figure in that column is trailing cash already paid over the last 365 days divided by the latest price — a distribution yield, not a forward yield, not a yield to maturity and not an SEC 30-day yield.
A fund is how most people end up owning this category, and it is not the same instrument as the bonds inside it. The yield column here counts the cash already paid out over the last year against today's share price, so it describes what has happened rather than what the holdings are contracted to earn — the two can differ by a wide margin in either direction. The other difference is the one people notice late: an individual bond has a date on which it repays, and a fund does not. It keeps selling and rebuying, so there is no maturity to wait for if the price falls.
| Ticker | Fund | HoldsThe kind of bonds the fund lends through. | Price | Distribution yield, trailing 12mCash the fund has already paid out over the past year, divided by today's price. | Cash paid / share, trailing 12m | Pays |
|---|---|---|---|---|---|---|
| STIP | iShares 0-5 Year TIPS Bond ETF | Inflation-linked | $100.99 | 5.35% | $5.41 | — |
| SCHP | Schwab US TIPS ETF | Inflation-linked | $26.09 | 5.00% | $1.30 | — |
| TIP | iShares TIPS Bond ETF | Inflation-linked | $107.64 | 4.94% | $5.32 | — |
| VTIP | Vanguard Short-Term Inflation-Protected Securities ETF | Inflation-linked | $49.83 | 4.14% | $2.06 | Quarterly |
How it loses money
The specific failure modes for this category, not a generic warning.
Most people arrive at bonds expecting the only question to be whether the borrower pays. The list below is the answer to a different question: the ways the money shrinks while every payment arrives exactly on schedule. Prices fall when new bonds pay more than yours, inflation can outrun a fixed payment, and a borrower who repays early hands the cash back at the worst moment to reinvest it. Read these before the yield, not after it.
- Real-rate riskTIPS prices fall when real yields rise. Inflation protection does not protect the price — a TIPS can lose value in a year when inflation was high, if real yields rose more.
- Phantom incomeIn a taxable account you can owe tax on principal accretion you have not yet received. That is the practical reason many holders keep TIPS in tax-deferred accounts.
- CPI is not your inflationThe index is a national basket. If your own spending is concentrated in housing, healthcare or education, your personal inflation can run well above the number your bond is indexed to.
- DeflationThe maturity value is floored at original principal, but the coupon payments are not: falling CPI lowers the adjusted principal and therefore the cash coupon. A TIPS bought in the secondary market above its adjusted principal can still lose.
- Liquidity and pricingThe TIPS market is far smaller than the nominal Treasury market. Bid-ask spreads widen faster in stress, and the real-yield quotes move around more than the underlying economics might suggest.
Where these are traded
The Treasury's direct issuance channel for notes, bonds and TIPS, including non-competitive bids at auction without a broker.
Holdings there cannot be sold before maturity without transferring them to a broker first
Visit TreasuryDirect ↗The Municipal Securities Rulemaking Board's official disclosure site, carrying offering documents, reported trade prices and continuing disclosures for municipal bonds.
Free official source; no account needed
Visit MSRB EMMA ↗The broker-dealer regulator that runs the TRACE trade-reporting system for corporate, agency and municipal bond transactions and publishes market data from it.
Also hosts BrokerCheck for looking up a firm or registered rep
Visit FINRA ↗Runs a retail bond desk with new-issue and secondary inventory across Treasuries, municipals, corporates, agencies and brokered CDs.
Individual bond pricing is quoted net of a dealer markup rather than as a separate commission
Visit Fidelity Investments ↗Listed for reference. No sponsorship badge means no affiliate relationship exists.