The US Treasury first implemented Inflation-Protected Bonds (TIPS) in 1997, and they now make up about 7% of the Treasury market. Since then, inflation has rarely gone above 3% until 2021. Tariffs (customs duties) began surging in 2018, and President Trump is now implementing widespread tariffs. With retailers having low profit margins, these tariffs will mostly be passed on a tax on consumers. This article represents my research on how to invest the bond portion of a portfolio to reduce volatility and prepare for higher inflation.
Inflation Forecasts
Inflation by various measures has fallen below 2.3%. Tariff increases were announced on April 2nd, and it takes time for products with the additional tariffs to reach the shelves. The Fed – Monetary Policy: Beige Book describes prices increasing at a Continue reading →