Hello, YieldAlley readers! In this issue:
Vanguard Expands TIPS Options with New Total Inflation-Protected Securities ETF (VTP)
U.S. Markets Reach New Highs Despite Rising Inflation and Tariff Uncertainty
$300 Bask Bank Checking Bonus
The Richest Person in Every State
And more!
NEWS
Standout Stories
⛽︎ Passive Investing Is Fueling the Rise of Mega-Firms (Morningstar)
☕️ How Starbucks’ CEO Plans to Tame the Rush-Hour Free-for-All (Bloomberg)
🏧 ‘Trump Accounts’ for Kids Come With $1,000—and Tax Complications (WSJ)
🏝️ Retiring Early? Don’t Expect Your Friends to Follow You (POF)
🛫 You’re paying $383 for a plane ticket. About $3.80 is profit for US airlines (Sherwood)
MARKET THOUGHTS
U.S. Markets Reach New Highs Despite Rising Inflation and Tariff Uncertainty
ECONOMY
The Federal Reserve's June FOMC meeting minutes revealed disagreement among policymakers about monetary policy direction, with most anticipating rate cuts this year but two members open to reductions as early as the July meeting, while some don't expect any cuts in 2025. Economic data releases were limited during the week, providing little additional guidance on the economic outlook. President Trump announced new trade measures including 25% tariffs on South Korea and Japan, varying levies on Canada, South Africa, Thailand, and Malaysia, and a dramatic increase of Brazil's tariff to 50% linked to legal proceedings against former President Bolsonaro, while also announcing an upcoming 50% tariff on copper that triggered an immediate spike in U.S. copper futures. Consumer price index (CPI) showed its biggest monthly increase in five months at 0.3% month-over-month in June, up from 0.1% in May, with year-over-year inflation rising to 2.7% from May's 2.4%, while core CPI ticked up to 2.9% year-over-year from 2.8% in May. Retail sales rebounded with a better-than-expected 0.6% increase in June after falling 0.9% in May, signaling consumer resilience despite inflationary pressures.
STOCKS
The S&P 500 Index and Nasdaq Composite Index reached new records during the week, supported by solid corporate earnings reports and generally favorable economic data, while the Dow Jones Industrial Average and S&P MidCap 400 Index ended in negative territory. Earnings season began in earnest with JP Morgan Chase and Citigroup both reporting better-than-expected Q2 results, followed by strong reports from consumer-facing names including PepsiCo, United Airlines, and Netflix that beat forecasts. NVIDIA reached the $4 trillion market capitalization threshold for the first time and rallied further after receiving Trump administration permission to sell its H2O artificial intelligence chips to China. Market reaction to the new tariff announcements was notably muted compared to previous tariff-related moves, with little performance difference between large-caps and small-caps, though growth stocks held up modestly better than value, while Delta Air Lines provided a supportive full-year 2025 earnings outlook after withdrawing guidance following April's tariff announcements.
FIXED INCOME
U.S. Treasuries rallied initially following the FOMC minutes release but lost ground to finish the week with intermediate- and long-term yields little changed while short-term yields marginally decreased amid speculation about Fed Chair Jerome Powell's future. Wednesday's 10-year Treasury note auction showed healthy demand, helping ease recent investor concerns about longer-maturity Treasury attractiveness amid fiscal deterioration. Investment-grade corporate bonds outperformed Treasuries despite generating mixed returns, with issuance in line with expectations and largely oversubscribed. High yield bonds mostly tracked equity movements amid mixed sentiment with light issuance following several new deals that priced early in the week, while the bank loan market saw active primary calendar activity driven by opportunistic refinancing transactions, with brief downward pressure occurring Wednesday when reports suggested President Trump was planning to fire Federal Reserve Chair Jerome Powell before quickly reversing when Trump clarified he wasn't going to remove Powell.
INCOME BUILDING
Vanguard Expands TIPS Options with New Total Inflation-Protected Securities ETF (VTP)
Vanguard has filled a notable gap in its ETF lineup with the July 2025 launch of the Vanguard Total Inflation-Protected Securities ETF (VTP), giving investors their first opportunity to access the full spectrum of Treasury Inflation-Protected Securities through a Vanguard ETF.
What VTP Offers
The new VTP tracks the performance of the entire U.S. TIPS market, including short-, intermediate-, and long-term maturities. This represents a significant expansion from Vanguard's previous TIPS ETF offering, which was limited to the Short-Term Inflation-Protected Securities ETF (VTIP) that only includes TIPS with maturities under five years.
VTP launches with a competitive 0.05% expense ratio, positioning it as a cost-effective alternative to existing full-spectrum TIPS ETFs like the iShares TIPS Bond ETF (TIP) with its 0.19% expense ratio, though it trails the Schwab U.S. TIPS ETF (SCHP) at 0.03%.
Filling the Duration Gap
Previously, investors wanting exposure to longer-duration TIPS through Vanguard had to use the Admiral Shares mutual fund version (VAIPX), which required a $50,000 minimum investment and carried a higher 0.10% expense ratio. VTP eliminates both barriers while providing similar broad TIPS market exposure.
The distinction between VTP and VTIP is important for investors to understand. VTIP's shorter duration profile makes it less volatile and more closely tracks current inflation changes, while VTP's longer duration exposure offers greater potential for capital appreciation during periods when real yields fall, though with correspondingly higher volatility.
This launch reflects broader investor interest in inflation protection tools. TIPS funds have seen modest inflows of $3.7 billion in early 2025, reversing the $2.2 billion outflows from the same period in 2024, though this still represents a relatively small portion of the over $230 billion invested in inflation-protected bonds.
The timing is particularly relevant given current market conditions. The 10-year TIPS breakeven inflation rate sits around 2.3%, meaning investors purchasing TIPS today are essentially betting that inflation will exceed this level over the coming decade.
Choosing Between Options
For investors considering TIPS exposure, the choice between VTIP and VTP comes down to risk tolerance and investment horizon. VTIP offers lower volatility and more direct inflation tracking, making it suitable for conservative investors or those using TIPS as a short-term inflation hedge. VTP provides broader market exposure and higher potential returns for long-term investors willing to accept greater price fluctuations.
Both ETFs simplify the tax complications associated with holding individual TIPS in taxable accounts, where investors face annual taxation on "phantom income" from inflation adjustments even before receiving the principal at maturity.
VTP's launch is part of Vanguard's broader expansion into fixed income, which also includes the new Total Treasury ETF (VTG) with a 0.03% expense ratio. This continued product development demonstrates Vanguard's commitment to providing comprehensive, low-cost investment options across all major asset classes.
For investors building inflation-protected portfolios, VTP represents a welcome addition that brings institutional-quality TIPS exposure to retail investors without the barriers of high minimums or elevated fees. Whether it becomes a significant player in the TIPS ETF space will likely depend on its ability to attract assets and potentially reduce its expense ratio over time, following Vanguard's traditional approach of lowering costs as funds scale.
The key consideration for investors is still whether ETF exposure aligns with their goals versus building individual TIPS ladders for predictable, inflation-adjusted income streams. VTP makes the ETF route more accessible, but the fundamental trade-offs between convenience and control remain unchanged.
INCOME BUILDING
Cash Rates
Government Money Market Funds (7-Day Yields)
SNVXX (Schwab Government Money Fund - Investor Shares): 4.04%
SPAXX (Fidelity Government Money Market Fund): 3.96%
TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 4.17%
VMFXX (Federal Money Market Fund): 4.22%
Brokered CD Rates (6-Month Rate)
Charles Schwab: 4.14%
E*Trade: 4.30%
Fidelity: 4.30%
Merrill Edge and Merrill Lynch: —
Vanguard: 4.35%
ETFs (30-Day Yields)
SGOV (iShares 0-3 Month Treasury Bond ETF): 4.22%
BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 4.15%
USFR (WisdomTree Floating Rate Treasury Fund): 4.27%
TFLO (iShares Treasury Floating Rate Bond ETF): 4.27%
DEALS AND BONUSES
$300 Bask Bank Checking Bonus Available for New Customers ($200 Without Direct Deposit)
Bask Bank is currently offering up to $300 in checking account bonuses for new customers through August 29, 2025, representing one of the more structured tiered bonus programs among online banks. The multi-component reward structure provides different earning opportunities based on direct deposit capability and bill payment preferences.
Offer Details
Available nationwide for new Bask Interest Checking Account customers only
Account opening requires soft credit pull and ChexSystems review (not sensitive)
$300 maximum bonus achievable through two separate earning tracks
$100 direct deposit track: $25 monthly bonus for up to 4 months when meeting qualifying activities
Monthly automated deposits totaling at least $3,000 (employer payroll, benefits, government payments)
10+ monthly debit card purchases totaling minimum $500
$200 bill payment track: $50 monthly bonus for up to 4 months when meeting qualifying activities
Must enroll in Bask Bill Center bill payment service
Complete at least 2 electronic bill payments monthly totaling minimum $50
No monthly maintenance fees or early account termination fees
No credit card funding options available
Bonus payments made at close of each monthly statement period
Check deposits, internal transfers, and peer-to-peer payments do not qualify for direct deposit requirements
Paper check bill payments through Bill Center do not qualify for bonus
Our Thoughts
This bonus structure offers solid value for customers who can naturally meet both earning tracks, providing potential monthly income of $75 over four months with minimal account maintenance requirements. The tiered approach accommodates different banking behaviors while maintaining reasonable qualification thresholds. However, the bill payment component may feel forced for customers who prefer managing payments directly with service providers. The $3,000 monthly direct deposit requirement could exclude some potential participants, though the debit card spending threshold remains accessible.
Picture of the Week
