QUICK DEFINITION
Treasury Inflation-Protected Security is a U.S. Treasury security whose principal is adjusted with changes in the Consumer Price Index.
WHY IT MATTERS
Why Treasury Inflation-Protected Security matters in bond markets
TIPS yields provide a widely followed market measure of real interest rates and help derive breakeven inflation.
MARKET CONTEXT
How to think about it
Bond investors use treasury inflation-protected security as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Treasury Inflation-Protected Security important for fixed-income investors?
← Back to the Bond Market Glossary Yes. TIPS yields provide a widely followed market measure of real interest rates and help derive breakeven inflation.