Canada’s Real Return Bonds (RRBs), first issued in December 1991, were an important model for later inflation-linked markets. The Treasury itself described the U.S. TIPS structure as based on Canadian RRBs with modifications, showing how linker designs spread internationally.
The U.S. Treasury publicly laid out plans to introduce inflation-indexed notes, including an expected January 1997 auction and February 1997 issuance. This announcement set the stage for a new U.S. government bond type designed to protect investors from inflation by linking payments to the Consumer Price Index (CPI).
The Treasury held the first auction of an inflation-indexed U.S. security: a 10-year note. This marked the start of the Treasury Inflation-Protected Securities (TIPS) program and began building a market for “real” (inflation-adjusted) yields in the United States.
A shorter 5-year maturity was added to the U.S. inflation-indexed program. Offering multiple maturities helped investors choose inflation protection over different time horizons and supported a developing yield curve (a set of rates across maturities).
The Treasury expanded TIPS into long maturities by beginning to offer 30-year inflation-indexed bonds. Longer maturities were important for pension funds and other investors with long-term liabilities, and they helped extend the market’s real-rate curve.
France issued its first inflation-linked government bond (OATi) in September 1998, described by the issuer as the first of its kind in the euro area. This was an early step toward building a European inflation-linked market alongside existing national programs such as the UK’s linkers.
The Treasury stopped issuing 5-year inflation-indexed notes after limited demand and liquidity concerns in the early years of the program. This decision concentrated issuance in longer maturities and reflected a period when the long-term direction of TIPS was still being debated by market participants.
The Treasury changed how stripped TIPS components (separated interest and principal payments) could be converted, making them fungible. This operational change was aimed at improving secondary-market trading and supporting a deeper market for TIPS.
A 30-year TIPS issued in October 2001 (maturing in 2032) illustrates that long-maturity inflation protection existed in the U.S. market before the later program changes of the 2000s. Such benchmark securities also became key reference points for measuring long-term real yields.
France issued an OAT indexed to euro-area inflation, linked to the Harmonised Index of Consumer Prices (excluding tobacco). This expanded the French linker program beyond domestic inflation and supported a broader euro inflation-linked market with a shared reference index.
The Treasury increased 10-year TIPS auctions to four per year using a pattern of original issues and reopenings. More frequent auctions helped improve market functioning by increasing supply and encouraging more consistent trading in the benchmark 10-year maturity.
The Treasury announced and implemented expansion of the TIPS lineup: introducing a 20-year TIPS and reintroducing a 5-year TIPS. These steps filled maturity “gaps” and aimed to broaden investor participation, while also introducing rules for handling negative real yields at auction.
The Treasury implemented a process for auctions that could stop out at negative yields: if the high accepted yield was negative, the coupon would be set at zero and the security would be issued at a premium. This mattered because it clarified how TIPS could trade in high-demand environments where investors were willing to accept negative real returns.
Treasury announced it would discontinue 20-year TIPS and reintroduce 30-year TIPS, reflecting investor interest in long-maturity inflation protection and comparability with 30-year nominal Treasuries. This shift reset the long end of the U.S. inflation-linked curve around a 30-year benchmark.
Germany’s debt agency describes inflation-linked federal securities (ILBs) as continuing to circulate and trade, even after new issuance later stopped. While outside the U.S. TIPS program, Germany’s linker market reflects how major sovereign issuers used inflation-linked bonds as part of broader bond-market development in the 2000s and 2010s.
A 5-year TIPS reopening in October 2010 produced the first auction in which the stop-out yield was negative. This event showed how strong demand for inflation protection and safety could push real yields below zero, influencing how investors and policymakers interpreted inflation compensation from bond markets.
Italy introduced BTP Italia in March 2012 as an inflation-linked bond aimed at retail savers as well as professional investors. This highlighted a global shift toward designing inflation-linked products for different investor groups, not only large institutions.
By the mid-2010s, France described regular issuance that supported two inflation-linked curves (domestic and euro-area), and the U.S. had settled into a 5-, 10-, and 30-year TIPS structure. Together, these developments show that inflation-linked government bonds had moved from experimentation to a durable segment of global sovereign bond markets by 2015.
Inflation-Linked Bonds: TIPS in the U.S. and Global Linkers, 1997–2015