Me too. Couldn't afford the bite of the non-competitive pie you took, but similar to what I did last year after your explanation on the auction process. TIPS held directly now amount to about 15% of my tax advantaged retirement portfolio.
Can't complain with 2.19%. Especially when the board has been screaming double digit inflation...coming soon.
My outlook? Less inflationary than that...coming soon.
Thanks for the chart on your blog. I'm curious how that looks with longer maturity bonds.
Unfortunately, the data doesn't go back as far. It therefore doesn't factor in the heavy inflation of the 1940s. I think if we were to factor that in then we'd see that the median yield in that chart would be far lower.
"Historically, the 20-year Treasury bond yield has averaged approximately two percentage points above that of three-month Treasury bills."
Using that information, and knowing that 3-month treasury bills have averaged a 0% real return (as seen in the previous chart I posted), we would expect long-term TIPS to yield about 2%.
I would also point out that at least some of that "two percentage points" premium is due to taking on more inflation risk. Owners of TIPS are more sheltered from that risk though, since TIPS come with some inflation protection. We therefore shouldn't expect to earn as much in theory.
One of the reasons the government offered TIPS is because they thought the public would be willing to accept a lower yield if the bonds came with inflation protection. It hasn't exactly worked out that way so far though, probably due in part to the never-ending conspiracy theories over the CPI.