Treasury Inflation Protected Securities (TIPS) Breaking Out Ahead Of Thursday's CPI Data

Conclusion, Investment Implications & Strategy

Treasury Inflation-Protected Securities (TIPS) are setting new 2 1/2 year highs this week, two days before the August Consumer Price Index (CPI) data is scheduled for release on Thursday morning. We view this as investors collectively trying to get in front of this report, which is already expected to be hotter than expected. Should this be the case and CPI rises equal to or more than expected, we believe it could have an adverse effect on US equity prices due to the recent inverse linear correlation between TIPS and the S&P 500.

Analysis

Treasury Inflation-Protected Securities (TIPS) are U.S. government bonds that shield investors from inflation by adjusting their principal value based on the Consumer Price Index (CPI). As inflation rises, the principal increases, and interest payments also rise, maintaining purchasing power. Rising TIPS prices and yields indicate increasing market expectations of future inflation, as they are designed to protect investors from rising prices by adjusting their principal and interest payments upwards with inflation. Investors buy TIPS as a hedge against inflation, so higher TIPS prices reflect the belief that the market expects inflation to exceed the “breakeven” rate, a benchmark tied to traditional Treasury bonds.

The Consumer Price Index (CPI) data for August 2025 will be released on Thursday, September 11, 2025, at 8:30 AM Eastern Time. This report is published by the U.S. Bureau of Labor Statistics (BLS) and provides data on inflation for the previous month.

The following is the forecast for Thursday’s CPI Data:

Market Expectations

The median forecast for August Consumer Price Index (CPI) is 0.3, which would be up from 0.2% in July
Year-over-year, the median forecast for August CPI is 2.9%, which would be up from 2.7% in July
The median forecast for August Core CPI is 0.3%, which would be unchanged from July
Year-over-year, the median forecast for Core CPI is 3.1%, which would be unchanged from July

The chart below plots the iShares Barclay’s TIPS Bond Fund ETF (TIP) daily since 2023 with its 200-day moving average, the latter a widely-watched major trend proxy.

iShares Barclays TIPS Bond Fund ETF daily since 2023

The green highlights show that TIPS is breaking out higher from its 111.26 April 2023 benchmark high, after testing and failing to exceed that level numerous times since September 2024. Moreover, not shown is that this breakout is occurring on expanding assets in the TIP ETF, indicating near-term bullish conviction in higher prices. This indicates that the market is betting that CPI data will as hot or hotter than expectations, ahead of Thursday’s data release.

This emerging breakout is important to us because TIP has had a significant inverse linear relationship with the S&P 500 (SPY) over the past three months, due to the anticipated drag that inflationary tariffs would have on equity prices. Taking this a step further, should Thursday’s CPI data show that consumer inflation is indeed increasing at a rate equal to or higher than market expectations, this could help to trigger a downward reversal in US equity prices, which has been losing upward momentum (according to the 21-day rate of change) since mid-August.

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Treasury Inflation Protected Securities (TIPS) Breaking Out Ahead Of Thursday’s CPI Data

Conclusion, Investment Implications & Strategy

Analysis

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Treasury Inflation Protected Securities (TIPS) Breaking Out Ahead Of Thursday’s CPI Data

Conclusion, Investment Implications & Strategy

Analysis

Asbury Research

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Asbury Research subscribers get more detail on our latest analysis,
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