Yesterday the face value yield on the 5yr inflation-protected treasury (TIP) (2.88%) was less than that of the regular 5-year treasury (2.81%). Theoretically, this should be impossible. The face value yield for the TIP is a floor value; it can't pay less even in deflation. If there's any meaningful chance for inflation then the TIP's face value should be below the 5-year. This has been part of a general drop in TIP yields to predictions of almost-zero inflation; but the drop has been most extreme in the 5-year.
Traditionally the difference between with TIP and the regular bond yield is used as an inflation estimate. The Cleveland Fed, which has published this in the past, has been forced to give up on that for the time being as the result is nonsensical.
If anybody can explain this I'm all ears. The fundamental I can think of is that the TIP has such a low face yield (0.65%) that it's almost a zero-coupon. If the government defaults late in the period that affects the TIP more than the conventional treasury. But, I've seen no indicators of an appreciable risk of default late in the period. BondGuy on CR proposed that it might be unwinding hedges selling their TIPs but to me it seems somebody should step in and buy those undervalued bonds, or at least swap 5-year treasuries for them.