Are people overreacting to the negative real yield in TIPs yesterday?

Discussion in 'Wall St. News' started by nitro, Oct 26, 2010.

Is there an overreaction of yesterday's TIP auction negative yield?

  1. Yes. This is more fear-mongering.

    6 vote(s)
    46.2%
  2. I no. Be afraid, be very afraid.

    3 vote(s)
    23.1%
  3. I don't know.

    2 vote(s)
    15.4%
  4. I don't care.

    2 vote(s)
    15.4%
  1. Inflation expectations, as seen in the yield differential between the treasuries and the inflation protected index.

    As the treasuries have gone way down since the QE II excitement. There is no other way to play the expectation of some inflation but to go negative on the TIPS.

    See if the 5 year is close to 0 and the TIPS are positive you will be saying that there will be no inflation at all in the next 5 years.

    So if 5 goes to 0 and you think that there will be at least 2% inflation you have to go negative on the TIPS.
     
    #11     Oct 26, 2010
  2. The current mid-mkt Apr15s (the bond that was auctioned yest) breakeven inflation rate is arnd 1.58%
     
    #12     Oct 26, 2010
  3. #13     Oct 26, 2010
  4. nitro

    nitro

    That is the best article of the bunch, imo. Thanks.
     
    #14     Oct 26, 2010
  5. zdreg

    zdreg

    article has disappeared. please post copy if u have one.
     
    #15     Oct 27, 2010
  6. zdreg

    zdreg