bonds Archives - Inflation Watch

10-year treasuries still sinking

writejesse — Tue, 22 Dec 2009 10:32:47 +0000

Treasuries dropped, pushing 10-year yields to the highest level in four months, on prospects the U.S. government’s final figure for third-quarter gross domestic product will signal faster inflation. The yield curve, the gap between shorter- and longer-term debt used as a barometer for the economy, widened to a record as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented government debt sales.

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Inflation-protected treasuries continue to outperform standard treasuries

writejesse — Tue, 15 Dec 2009 21:27:05 +0000

The best way to gauge long-term inflation expectations is by comparing the price of Treasury inflation-protected bonds to the price of inflation-unadjusted treasuries. A simple way to do this is by comparing the price of TIP (iShares Barclays TIPS Bond Fund) to TLT (iShares Lehman 20+ Year Treasury Bond Fund). Since the beginning of October 2009, the ratio of the TIP price to the TLT price has been rising, meaning that TIP has been outperfoming TLT. (See chart below.) In other words, inflationary expectations have been increasing during the past 10 weeks.

TIP has outperformed TLT since ealry October

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WSJ writer says inflation is a “distant threat;” bond traders, gold traders seem to disagree.

writejesse — Tue, 15 Dec 2009 12:12:52 +0000

Mark Congloff at the Wall Street Journal says that until unemployment starts to drop, inflation “remains a distant threat.”

If that’s the case, then why has gold performed so well the past year? Why have long treasury bonds performed so poorly?

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