10-year TIPS pay 2.74% over inflation. The I bond fixed rate is 0.90%
On October 16, 2026 the Treasury real yield curve put 10-year TIPS at 2.74%, three times the I bond fixed rate. Gap, breakeven, tax and cap, in arithmetic.
◆ The Signal
30-second read
- What happened
- The Treasury's daily real yield curve put the 10-year TIPS real yield at 2.74% on October 16, 2026 and 2.80% on October 19, 2026. The I bond fixed rate, the part of an I bond that is paid above inflation, is 0.90% for bonds issued May 1 through October 31, 2026. On the same October 16 the nominal 10-year par yield was 5.09%, so the market-implied inflation rate over ten years was 2.35%.
- Why
- Both securities add a measured CPI change to a fixed real rate. TIPS set that real rate at auction and it moves daily in the secondary market; the I bond fixed rate is set by the Treasury twice a year and does not trade. The two rates have diverged: 2.74% against 0.90%, a gap of 1.84 percentage points a year, before tax and before the I bond's purchase cap.
- The numbers that matter
- 2.74%10-year TIPS real yield, Treasury par real yield curve, October 16, 20260.90%I bond fixed rate, bonds issued May 1 to October 31, 2026 (TreasuryDirect)2.35%10-year breakeven inflation: 5.09% nominal minus 2.74% real, October 16, 2026 (calculation)$988.98Extra real growth on $10,000 over five years at 2.74% versus 0.90% (calculation)
- Why it matters
- A household holding $10,000 of inflation-linked savings earns about $989 more in real terms over five years at the TIPS rate than at the I bond fixed rate, but pays tax on TIPS principal growth every year.
- What happens nextas we saw it on 20 Oct 2026
- The Treasury announces the I bond fixed rate and inflation rate for November 2026 to April 2027 on November 1, 2026. The real yield curve is published every business day on home.treasury.gov.
Real yields
Every point on the TIPS real yield curve is at least 1.6 percentage points above the I bond fixed rate.
| 5-year TIPS | 2.5% |
|---|---|
| 10-year TIPS | 2.7% |
| 30-year TIPS | 3.2% |
| I bond fixed rate | 0.9% |
% per year above the CPI, Treasury par real yield curve for October 16, 2026; I bond fixed rate for bonds issued May 1 to October 31, 2026Source: U.S. Treasury, Daily Treasury Par Real Yield Curve Rates, October 16, 2026; TreasuryDirect, I bonds interest rates page, retrieved October 20, 2026
Go deeper
On October 16, 2026 the United States Treasury would pay a buyer of its 10-year inflation-protected note 2.74% a year above the CPI, according to its own par real yield curve. On the same day it was paying a buyer of its Series I savings bond 0.90% a year above the CPI. Same issuer, same price index. The difference is 1.84 percentage points a year, and it compounds.
The real yield curve on October 16 and October 19, 2026
Data
The 10-year TIPS real yield was 2.74% on October 16, 2026 and 2.80% on October 19
The Treasury's Daily Treasury Par Real Yield Curve Rates table for October 2026 lists the 10-year real yield at 2.74% on October 16, 2026, with the 5-year at 2.52% and the 30-year at 3.16%. On October 19 the three were 2.56%, 2.80% and 3.21%; the 10-year had been 2.95% on October 5. These are par yields derived from secondary-market TIPS prices, which is why they move daily.
The Treasury's Daily Treasury Par Real Yield Curve Rates table for October 2026 lists the 10-year real yield at 2.74% on October 16, 2026, with the 5-year at 2.52% and the 30-year at 3.16%. On October 19 the three were 2.56%, 2.80% and 3.21%; the 10-year had been 2.95% on October 5. These are par yields derived from secondary-market TIPS prices, which is why they move daily.
Data
The nominal 10-year par yield was 5.09% on the same October 16
The Treasury's Daily Treasury Par Yield Curve Rates table for October 2026 shows the nominal 5-year at 4.89%, the 10-year at 5.09% and the 30-year at 5.43% on October 16, 2026. As of October 20, 2026 the nominal table had no October 19 row, so nominal-versus-real comparisons below use October 16.
The Treasury's Daily Treasury Par Yield Curve Rates table for October 2026 shows the nominal 5-year at 4.89%, the 10-year at 5.09% and the 30-year at 5.43% on October 16, 2026. As of October 20, 2026 the nominal table had no October 19 row, so nominal-versus-real comparisons below use October 16.
Wealth Signal calculation
Breakeven inflation on October 16, 2026: 2.37% at 5 years, 2.35% at 10 years, 2.27% at 30 years
Breakeven inflation is the nominal par yield minus the real par yield for the same maturity. 5-year: 4.89% − 2.52% = 2.37%. 10-year: 5.09% − 2.74% = 2.35%. 30-year: 5.43% − 3.16% = 2.27%. If CPI inflation averages exactly 2.35% over the ten years, a 10-year TIPS and a 10-year nominal note bought on October 16 return the same before tax; see the breakeven explainer.
Breakeven inflation is the nominal par yield minus the real par yield for the same maturity. 5-year: 4.89% − 2.52% = 2.37%. 10-year: 5.09% − 2.74% = 2.35%. 30-year: 5.43% − 3.16% = 2.27%. If CPI inflation averages exactly 2.35% over the ten years, a 10-year TIPS and a 10-year nominal note bought on October 16 return the same before tax; see the breakeven explainer.
| Maturity | Nominal par yield | Real (TIPS) par yield | Breakeven inflation |
|---|---|---|---|
| 5-year | 4.89% | 2.52% | 2.37% |
| 10-year | 5.09% | 2.74% | 2.35% |
| 30-year | 5.43% | 3.16% | 2.27% |
Source: U.S. Treasury, Daily Treasury Par Yield Curve Rates and Daily Treasury Par Real Yield Curve Rates, rows for October 16, 2026, retrieved October 20, 2026. Breakeven is nominal minus real (calculation).
The I bond fixed rate is 0.90%, and it is also a real yield
Fact
An I bond's composite rate is a fixed rate plus a CPI-based inflation rate, combined by a published formula
TreasuryDirect's I bond interest-rates page gives the composite rate as “[Fixed rate + (2 × semiannual inflation rate) + (fixed rate × semiannual inflation rate)]”. For bonds issued May 1 to October 31, 2026 the fixed rate is 0.90% and the semiannual inflation rate set May 1, 2026 is 1.67%, which the page works through to a 4.26% composite: 0.0090 + 0.0334 + 0.0001503 = 0.0425503. The fixed rate stays with a bond for its 30-year life; the inflation rate is reset every May 1 and November 1.
TreasuryDirect's I bond interest-rates page gives the composite rate as “[Fixed rate + (2 × semiannual inflation rate) + (fixed rate × semiannual inflation rate)]”. For bonds issued May 1 to October 31, 2026 the fixed rate is 0.90% and the semiannual inflation rate set May 1, 2026 is 1.67%, which the page works through to a 4.26% composite: 0.0090 + 0.0334 + 0.0001503 = 0.0425503. The fixed rate stays with a bond for its 30-year life; the inflation rate is reset every May 1 and November 1.
The fixed rate is therefore the I bond's real yield, in the same sense that 2.74% is the 10-year TIPS real yield. The difference is how it is set: TIPS real yields come out of a market each day, while the I bond fixed rate is announced by the Treasury twice a year without a published method. The site's I bond rate formula piece goes through the mechanics.
Data
The 0.90% fixed rate has been in place since November 1, 2025, down from 1.30% in 2023 and 2024
The same page's history shows 0.90% from November 1, 2025, after 1.10% from May 1, 2025, 1.20% from November 1, 2024 and 1.30% from November 1, 2023. From May 1, 2020 to October 2022 it was 0.00%; the highest in the table is 3.60%, set May 1, 2000.
The same page's history shows 0.90% from November 1, 2025, after 1.10% from May 1, 2025, 1.20% from November 1, 2024 and 1.30% from November 1, 2023. From May 1, 2020 to October 2022 it was 0.00%; the highest in the table is 3.60%, set May 1, 2000.
Wealth Signal calculation
The real-yield gap is 1.84 points at 10 years and 1.62 points at 5 years
2.74% − 0.90% = 1.84 percentage points a year at 10 years (October 16, 2026); 2.52% − 0.90% = 1.62 points at 5 years. On October 19 the 10-year gap was 1.90 points.
2.74% − 0.90% = 1.84 percentage points a year at 10 years (October 16, 2026); 2.52% − 0.90% = 1.62 points at 5 years. On October 19 the 10-year gap was 1.90 points.
What $10,000 earns in real terms over five years
Because both add the CPI change on top of a real rate, the inflation part cancels out of a comparison. What is left is the real rate compounded. The calculation below compounds annually, holds the TIPS to maturity and ignores tax.
Wealth Signal calculation
$10,000 grows to $11,447 at 2.74% and to $10,458 at 0.90% over five years, in constant dollars
$10,000 × 1.02745 = $11,447.16 at the 10-year TIPS real yield; $10,000 × 1.02525 = $11,325.12 at the 5-year; $10,000 × 1.00905 = $10,458.17 at the I bond fixed rate. Differences against the I bond: $988.98 and $866.95 of purchasing power over five years. Over ten years, $10,000 at 2.74% reaches $13,103.75 and at 0.90% reaches $10,937.34. All amounts are in October 2026 dollars.
$10,000 × 1.02745 = $11,447.16 at the 10-year TIPS real yield; $10,000 × 1.02525 = $11,325.12 at the 5-year; $10,000 × 1.00905 = $10,458.17 at the I bond fixed rate. Differences against the I bond: $988.98 and $866.95 of purchasing power over five years. Over ten years, $10,000 at 2.74% reaches $13,103.75 and at 0.90% reaches $10,937.34. All amounts are in October 2026 dollars.
$11,447
$10,000 after 5 years at 2.74% real
10-year TIPS par real yield, October 16, 2026 (calculation)
$10,458
$10,000 after 5 years at 0.90% real
I bond fixed rate, May 1 to October 31, 2026 (calculation)
$989
Difference in constant dollars
Before tax; TIPS held to maturity (calculation)
Interpretation
The simplification that matters most is “held to maturity”
An I bond does not trade, so it is never worth less than the amount paid plus interest earned. A TIPS does trade, and its price moves inversely with real yields: the fall in the 10-year real yield from 2.95% on October 5 to 2.74% on October 16, 2026 raised prices of existing TIPS, and the reverse happens when yields climb. The 2.74% is a yield to maturity; it describes the outcome only for a buyer who holds to maturity.
An I bond does not trade, so it is never worth less than the amount paid plus interest earned. A TIPS does trade, and its price moves inversely with real yields: the fall in the 10-year real yield from 2.95% on October 5 to 2.74% on October 16, 2026 raised prices of existing TIPS, and the reverse happens when yields climb. The 2.74% is a yield to maturity; it describes the outcome only for a buyer who holds to maturity.
Deflation, the floor and the tax bill
Fact
A TIPS never repays less than its original principal at maturity, but interim adjustments can go down
TreasuryDirect's TIPS page states that the principal is adjusted using a version of the Consumer Price Index from the Bureau of Labor Statistics, that TIPS “pay a fixed rate of interest every six months until they mature” on the adjusted principal, and that “you never get less than the original principal” at maturity. Terms are 5, 10 or 30 years; the minimum purchase is $100. Before maturity, the adjusted principal can fall when prices fall, and the semiannual interest payment falls with it.
TreasuryDirect's TIPS page states that the principal is adjusted using a version of the Consumer Price Index from the Bureau of Labor Statistics, that TIPS “pay a fixed rate of interest every six months until they mature” on the adjusted principal, and that “you never get less than the original principal” at maturity. Terms are 5, 10 or 30 years; the minimum purchase is $100. Before maturity, the adjusted principal can fall when prices fall, and the semiannual interest payment falls with it.
Fact
An I bond's composite rate stops at zero
The I bond interest-rates page says that deflation can pull the combined rate below the fixed rate but that “if the inflation rate is so negative that it would pull the combined rate below zero, we don't let that happen.” An I bond's redemption value therefore never declines; a TIPS holder in the same conditions sees the next coupon shrink, with the floor applying only at maturity.
The I bond interest-rates page says that deflation can pull the combined rate below the fixed rate but that “if the inflation rate is so negative that it would pull the combined rate below zero, we don't let that happen.” An I bond's redemption value therefore never declines; a TIPS holder in the same conditions sees the next coupon shrink, with the floor applying only at maturity.
Fact
TIPS principal growth is reported to the IRS every year; I bond interest can be deferred for up to 30 years
TreasuryDirect's tax-forms page says: “We report the change in principal for all TIPS you own on form 1099-OID,” and “We report the change each year, even if your TIPS hasn't matured and you haven't been paid.” Coupon interest goes on Form 1099-INT. For I bonds, TreasuryDirect says the owner may report earnings each year or defer until the bond is cashed or matures; IRS Publication 550 (2025) calls these Method 1, “postpone reporting the interest until the earlier of the year you cash or dispose of the bonds” or final maturity, and Method 2, report the increase each year. Both securities are federally taxable and exempt from state and local tax.
TreasuryDirect's tax-forms page says: “We report the change in principal for all TIPS you own on form 1099-OID,” and “We report the change each year, even if your TIPS hasn't matured and you haven't been paid.” Coupon interest goes on Form 1099-INT. For I bonds, TreasuryDirect says the owner may report earnings each year or defer until the bond is cashed or matures; IRS Publication 550 (2025) calls these Method 1, “postpone reporting the interest until the earlier of the year you cash or dispose of the bonds” or final maturity, and Method 2, report the increase each year. Both securities are federally taxable and exempt from state and local tax.
Wealth Signal calculation
At 2.35% inflation, $10,000 of TIPS generates about $235 of taxable principal growth in a year that is not paid in cash
Using the 10-year breakeven of 2.35% as an illustration of what the market priced on October 16, 2026, not a forecast: $10,000 × 2.35% = $235 of principal accretion in the first year, reported on Form 1099-OID. At a 22% marginal federal rate the tax is $51.70; at 24%, $56.40. The cash received that year is the coupon, roughly $10,000 × 2.74% = $274 at the October 16 real yield. So about $235 of taxable income arrives only as a higher principal figure on a statement. An I bond holder who defers owes nothing on the same growth until redemption. Inside an IRA the distinction disappears.
Using the 10-year breakeven of 2.35% as an illustration of what the market priced on October 16, 2026, not a forecast: $10,000 × 2.35% = $235 of principal accretion in the first year, reported on Form 1099-OID. At a 22% marginal federal rate the tax is $51.70; at 24%, $56.40. The cash received that year is the coupon, roughly $10,000 × 2.74% = $274 at the October 16 real yield. So about $235 of taxable income arrives only as a higher principal figure on a statement. An I bond holder who defers owes nothing on the same growth until redemption. Inside an IRA the distinction disappears.
The cap: $10,000 a year against $10 million an auction
Fact
A person may buy $10,000 of electronic I bonds a calendar year, plus $5,000 in paper bonds with a tax refund
TreasuryDirect's buying page states: “In any one calendar year, you may buy up to $10,000” in Series I electronic savings bonds for oneself, and “You may buy up to $5,000 in paper savings bonds with each year's tax refund.” An I bond cannot be redeemed for 12 months, a redemption before five years forfeits the last three months of interest, and it earns interest for 30 years. The TIPS noncompetitive auction maximum, per the TIPS page, is $10 million.
TreasuryDirect's buying page states: “In any one calendar year, you may buy up to $10,000” in Series I electronic savings bonds for oneself, and “You may buy up to $5,000 in paper savings bonds with each year's tax refund.” An I bond cannot be redeemed for 12 months, a redemption before five years forfeits the last three months of interest, and it earns interest for 30 years. The TIPS noncompetitive auction maximum, per the TIPS page, is $10 million.
Wealth Signal calculation
At the cap, the real-yield gap is worth $184 a year per person before tax
$10,000 × 1.84 percentage points = $184 of real income a year, the difference between the annual electronic I bond allowance and the same $10,000 in 10-year TIPS at the October 16, 2026 real yield. With the $5,000 paper allowance, $15,000 × 1.84% = $276. Beyond $15,000 a year the I bond is not available.
$10,000 × 1.84 percentage points = $184 of real income a year, the difference between the annual electronic I bond allowance and the same $10,000 in 10-year TIPS at the October 16, 2026 real yield. With the $5,000 paper allowance, $15,000 × 1.84% = $276. Beyond $15,000 a year the I bond is not available.
What it means for your money
Stripped down, the two are the same promise, the CPI plus a real rate, in different packaging. The packaging is where the money is.
- The real rate. 2.74% (10-year TIPS, October 16, 2026) against 0.90% (I bond, May to October 2026 issues): about $989 of constant-dollar difference on $10,000 over five years, before tax.
- Price risk. An I bond's value never falls; a TIPS price moves daily and equals adjusted principal only at maturity.
- Tax timing. TIPS principal growth is taxed federally every year as “phantom” income on a 1099-OID; I bond tax can be deferred until redemption or 30 years.
- Liquidity and size. I bond: locked 12 months, penalty before five years, $15,000 a year per person. TIPS: saleable any business day at the market price, no comparable cap.
One more date matters. The November 2026 I bond inflation component is already set by the September 2026 CPI, published October 14, 2026; the site's November I bond piece works it out at 2.04% for six months. The fixed rate that goes with it is not published until November 1, 2026. Whether it stays at 0.90% while 10-year TIPS trade near 2.8% is a question for that announcement. The arithmetic of holding cash through inflation is in Inflation and your savings.
This article does not claim that either security is the better choice for any reader, and it does not predict the I bond fixed rate to be announced on November 1, 2026 or the path of TIPS real yields. The growth figures are arithmetic on the Treasury's par real yields of October 16, 2026 and the published I bond fixed rate, compounded annually, before tax, with the TIPS held to maturity; actual I bond interest compounds semiannually under the composite formula, and a TIPS note's coupon differs from the par yield. The 2.35% breakeven is what the curves implied on one day, not a forecast of inflation. No 10-year TIPS auction result is quoted because TreasuryDirect's results pages could not be retrieved. Nothing here is tax or investment advice.
Sources
- Daily Treasury Par Real Yield Curve Rates, October 2026U.S. Department of the Treasury · Oct 20, 2026 · Primary source
- Daily Treasury Par Yield Curve Rates, October 2026U.S. Department of the Treasury · Oct 20, 2026 · Primary source
- I bonds interest rates (fixed rate, inflation rate, composite rate formula and history)TreasuryDirect (savingsbonds.gov), Bureau of the Fiscal Service · Oct 20, 2026 · Primary source
- I bonds (overview: redemption after 12 months, 3-month penalty, 30-year term, tax treatment)TreasuryDirect (savingsbonds.gov), Bureau of the Fiscal Service · Oct 20, 2026 · Primary source
- Buy a savings bond (annual purchase limits)TreasuryDirect (savingsbonds.gov), Bureau of the Fiscal Service · Oct 20, 2026 · Primary source
- Treasury Inflation-Protected Securities (TIPS)TreasuryDirect (savingsbonds.gov), Bureau of the Fiscal Service · Oct 20, 2026 · Primary source
- Tax forms and withholding (marketable securities; TIPS 1099-OID reporting)TreasuryDirect (savingsbond.gov), Bureau of the Fiscal Service · Oct 20, 2026 · Primary source
- Publication 550 (2025), Investment Income and Expenses (for use in preparing 2025 returns)Internal Revenue Service · Oct 20, 2026 · Primary source
Related analysis
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