My dumb-simple analysis is that TIPS real yields are capped because why would you own equities if you can get, say, 8% real from TIPS. The sky is the limit for nominal yields - hello 18% - but not with TIPS.Perhaps. Or perhaps the government selling more and more bills/notes/bonds will flood the market and drive rates up.Maybe. Or maybe the people hoping for inflation/interest rates to remain at low levels are just displaying recency bias. Time will tell.Oh the salty tears that will be shed by those holding out, waiting to jump into TIPS in the 2.5-3.0% range, if real yields drop down below <2.0%...
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Ah, but see above:
Higher inflation and higher interest rates can lead to declining real yields due to increased demand for TIPS.
It's not predicated on a return to low rates.
We are living in interesting times.
Statistics: Posted by learnbehumble — Tue Apr 30, 2024 8:18 pm — Replies 3397 — Views 811493