Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
How will Fed's new "No Raise on Interest Rates through mid 2013" Affect TIPS +?
I'm still trying to get the hang of TIPS when various scenario changes occur. Now that the Fed has pretty much guaranteed no Interest Rate increases through mid 2013, how much, if any, will that affect TIPS funds like VPIIX and HARRX and Long Term Treasuries like VUSTX (i.e., will they go up, down, or will it not make a substantial difference)?
Reply to @fundalarm: Hi JR, and thanks for the info... I was wondering the same thing myself.
Tips are one of the few areas that are performing reasonably well... you think that's because they are looking ahead and anticipating fairly severe inflation?
Pimco STPZ (1-5 years) is investing in short maturity TIPS. There are actually some 4yr 6mo issues.
I think Pimco is buying the TIPS on the secondary market so time to maturity is shorter. Although the portfolio also seems to hold a bunch of T-Bills if PIMCO thinks inflation is low and T-Bills offer better deal.
Reply to @Old_Joe: Hi OJ... first of all, TIPs are adjusting in parallel with long term treasuries, which have been on the roll... Second, inflation expectation for 10 years and out have not really changed and are still @ 2+ rate. So the answer is not so much in increased inflation expectation as it is a rally in long term treasuries.
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this..... TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus. IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio. ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions. AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds. Hopefully, this write has some value and the "thought" process was somewhat understandable.
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this..... TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus. IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio. ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions. AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds. Hopefully, this write has some value and the "thought" process was somewhat understandable.
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this..... TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus. IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio. ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions. AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds. Hopefully, this write has some value and the "thought" process was somewhat understandable.
Reply to @Old_Joe: what are other "safe" (i.e. not correlated to equities) assets out there when you need to offset risk? the choices, especially those that are liquid and tradeable, are very limited. they are long term treasuries and gold.
OJ still maintains a healthy lifestyle. I, and especially from the FA days, will testify that I feel one of OJ's greatest attributes to FA, now MFO and to his continued good health is his keen sense of observation and WIT. I salute, OJ for helping all of us along with his words and wit, when the markets are slapping us in the face.
Reply to @catch22: i know... i once asked him to adopt me.. but he refused (something to do with the wife not approving)... it's great gentlemen that you continue this journey, from FA to MFO. you're the soul of the site.
today is a good day in TIPs education. Treasuries at record low, but similar maturity TIPs are down -- due to drastically decreased inflation expectations (despite higher ppi). the break even point moved from 2.18 to 2%.
Hi, Home too late after a long and busy day, to be surprised that TIPS did not hold up well as I would have expected. This action gave our TIPs funds a good face slap.....ouch. Only can say a big....hmmmm from this house.
Comments
•TIPS are issued in terms of 5, 10, and 30 years.
I don't see any shorter maturity issues.
http://www.treasurydirect.gov/instit/annceresult/press/preanre/2011/2011_tips.htm
Tips are one of the few areas that are performing reasonably well... you think that's because they are looking ahead and anticipating fairly severe inflation?
I think Pimco is buying the TIPS on the secondary market so time to maturity is shorter. Although the portfolio also seems to hold a bunch of T-Bills if PIMCO thinks inflation is low and T-Bills offer better deal.
http://seekingalpha.com/article/213682-tips-lower-duration-for-better-inflation-protection
Hope all is well with you! Take care.
OJ
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this.....
TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus.
IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio.
ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions.
AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds.
Hopefully, this write has some value and the "thought" process was somewhat understandable.
Regards,
Catch
Howdy All,
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this.....
TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus.
IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio.
ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions.
AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds.
Hopefully, this write has some value and the "thought" process was somewhat understandable.
Regards,
Catch
Howdy All,
First, I am not so sure that Mr. Catch is fully alert this Thursday morning, but I will attempt this.....
TIPS, as I/we have used them today and in the past are viewed at this house as not so much an inflation fighter; but are indeed another area to which "safe" money runs and I find this to be the biggest coorelation to TIPS upward price value at this time, and is indeed related to U.S. Treasury issues in this fashion. While this may seem to be a perverted view, reason or method to used to consider an investment area/decision; we do view this area in this fashion. As noted before, we are not necessarily chasing a yield, cause we know the yields are not much; we are chasing the possilbe situation that folks are going to place monies into these areas and drive yeilds down and the NAV's up. This function is where we have looked for the "earnings/positive returns"; to obtain the NAV price growth, with the small yield being a bonus.
IF there were a massive agreement in the EU and DC regarding an all inclusive and magical fix to the problems of government debt, business functions and a wonderful plan put in place with agreement by 50% of the political and business crowd; our bond funds would get hammered and one would be a fool to not have at least 80% in a diversified global equity(s) portfolio.
ALAS, I don't find such a utopian model in place; and thus, our portfolio reflects the current conditions.
AS to long term bonds, be they corp. or gov't; my recall is that come hell or high water, or the ability or lack of; many pension funds to make good decisions, many pension funds do and will continue to buy and hold long term bonds.
Hopefully, this write has some value and the "thought" process was somewhat understandable.
Regards,
Catch
Hey, there; OJ.....from the last photo I viewed of you; you are in good shape...:)
Take care,
Mark
From the earlier years when he used the name "Charles Atlas".
In jest, I post this link to avoid any law suit.....
http://www.google.com/imgres?q=charles+atlas&hl=en&sa=G&gbv=2&tbm=isch&tbnid=5ikk2irv0yU6OM:&imgrefurl=http://rexandchrisinnz.wordpress.com/tributes/men-or-perhaps-male-movie-stars/in-or-so-called-straight/&docid=of5uyjn24fcWNM&w=316&h=480&ei=XmNNTou5GKLh0QHLh7iHBw&zoom=1&iact=hc&vpx=297&vpy=139&dur=4727&hovh=277&hovw=182&tx=117&ty=132&page=2&tbnh=132&tbnw=88&start=34&ndsp=32&ved=1t:429,r:1,s:34&biw=1237&bih=748
OJ still maintains a healthy lifestyle. I, and especially from the FA days, will testify that I feel one of OJ's greatest attributes to FA, now MFO and to his continued good health is his keen sense of observation and WIT. I salute, OJ for helping all of us along with his words and wit, when the markets are slapping us in the face.
Regards,
Mark
Hi,
Home too late after a long and busy day, to be surprised that TIPS did not hold up well as I would have expected. This action gave our TIPs funds a good face slap.....ouch.
Only can say a big....hmmmm from this house.
Pillow time for this fella.
Catch