Sunday, March 16, 2008

TIPSy Bond Buyers

"'Going negative' usually happens in politics, not the bond market. But one corner of the bond world has gone alarmingly negative lately. The real yield on five-year [TIPS] has turned negative for the first time since the Treasury Department started issuing the securities in 1997. Late yesterday, they yielded -0.026%, meaning the return investors get on these securities is a little less than the inflation rate. ... Inflation expectations are certainly rising. ... But it's too early to say the Fed is losing its inflation-fighting credibility", Mark Gongoff (MG) at the WSJ, 12 March 2008.

I have viewed TIPS as a scam from the first time they were issued. MG, are you serious about the Fed? Gold is $996, the Euro $1.56 and oil $110. Why do you think this is so?

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