Treasury’s TIPS Market Faces Uncertainty as October CPI Data Goes Missing
The WHITE House's announcement that October Consumer Price Index (CPI) data will not be released has thrown the Treasury Inflation-Protected Securities (TIPS) market into disarray. These securities rely on CPI figures to calculate investor payouts, with their principal amounts adjusting based on inflation metrics. Without October's numbers, fallback procedures—never before triggered—will activate by late November.
Barclays Capital's Jonathan Hill draws parallels to debt-limit crises, calling this "the TIPS market's equivalent." The Ripple effects extend beyond TIPS to inflation swaps, where floating rates are exchanged for CPI-based payments. Even if delayed data eventually surfaces, its accuracy remains in question due to lapsed government funding halting price surveys.
