Why are TIPS bonds only paying about 2⅓% when inflation is at 7.9%?

Discussion in 'Fixed Income' started by kmiklas, Apr 11, 2022.

  1. kmiklas

    kmiklas

    This instrument seems to be asleep at the wheel.

    With inflation weighing in at about 8%, and TIPS bonds paying about 2⅓%. I did the calcuations, and the numbers aren't adding up... maybe one of you can check my math.

    Can anyone explain why TIPS bonds aren't covering the inflation rate, when that's their raison d'être; their purpose for existing?

    1. https://www.treasurydirect.gov/indi..., or,original principal, whichever is greater.
     
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  3. kmiklas

    kmiklas

    Thanks... one would think that TIPS are a good buy in this inflationary market.

    It still perplexes me why gold hasn't shot up to at least USD3000
     
  4. Yeah this whole macro econ situation is perplexing, good word haha

    I maxed out my Series-I purchases for '21 and '22, haven't touched TIPS (besides having an allocation of the IVOL etf for a few months https://www.ivoletf.com/ -- I ended up dumping it)

    This YT show has been interesting, might give you some more ideas to make sense of this craziness
     
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  5. 2rosy

    2rosy

    isn't inflation closer to 13%
     
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  6. zdreg

    zdreg

    re: perplexion Every commodity/stock moves on it own schedule, while seemingly random. It is just like a woman. That is why the stock market is always referred to as a she.
     
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  7. kmiklas

    kmiklas

    AAAGH!!! You're scaring me!!!

    In the USA? Would you kindly cite a reference to this number?
     
  8. no
     
  9. zdreg

    zdreg

    1. Calculate your own basket
    2. Expect that the government lies in order not to pay the full cost of living adjustment to social security recipients and to make you pay higher taxes as the tax brackets are not fully adjusted for inflation.
     
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  10. ET180

    ET180

    It is, they cheat. The assume substitutions, overvalue technological improvements, and don't even consider housing prices directly. They use owners equivalent rent where they basically just ask people what they think they could rent their property for. It's a joke. Tracking the price of a Big Mac is a better measure of real inflation than the CPI.
     
    #10     Apr 11, 2022
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