Just one observer’s case. I’m not qualified to say either way.
“ We’ve not needed to fear about inflation for 15 years, and in its absence, complacency has set in. Traders within the US are pricing in a mean of 1.75 per cent inflation over the subsequent 10 years, based mostly on implied charges within the Treasury Inflation-Protected Securities market. That’s frighteningly low. Traders shouldn’t underestimate the opportunity of the unbelievable.”https://newslagoon.com/markets-are-a-lot-too-complacent-over-the-danger-of-inflation/844/
Comments
Agree, my thoughts too, after several paragraphs and the "strange" grammar thing that is noticeable from more and more "sources". The site is a multi subject format and obviously looking for the site hits for cash flow.
About us, for the Newslagoon group
I tried to link directly to the newspaper, but found it impossible. I searched the web for a source that would make it possible to share with this board, hitting on the “news lagoon” link I provided. My take is that “news lagoon” does use machines to rewrite columns appearing in major press. I’ve noted discrepancies before between the actual FT article and some of those rewrites.
The author of that piece is Peter Cramer, CFA, https://www.linkedin.com/in/peter-cramer-cfa-b9362836
Here’s a lengthy Google search result that may take one to the actual FT article. I believe (but am not sure) that you can than view the original work.
https://www.google.com/search?source=hp&ei=RhszXsrdBdWsytMP8emKmAY&q=peter+cramer+markets+too+complacement+about+inflation+financial+times&oq=peter+cramer+markets+too+complacement+about+inflation+financial+times&gs_l=psy-ab.3...3004.26932..27445...1.0..0.607.20059.0j8j37j22j2j2......0....1..gws-wiz.....6..0i362i308i154i357j0j0i131j0i10j0i22i30j33i160j33i299j33i22i29i30j33i10i299j33i10i160j33i10.JzC0IOGSx2M&ved=0ahUKEwjKmKmX9avnAhVVlnIEHfG0AmMQ4dUDCAs&uact=5
Geez - They really butcher that piece. My apologies. Afraid I’ll be unable to share some of the good reads with you guys from my FT subscription. I typically devote an hour each evening digesting it - and it’s natural to want to share some of those reads.
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MikeM said: “In the same vane I was thinking on the bond side, when is it time to start leaning on 'treasury inflation protected' bonds, TIPs? There has been a couple very good recent threads here on MFO with bond funds, but they focus on what has worked in the past. There hasn't been much discussion for what might work best when, not if, inflation starts to take off.”
Right Mike. That’s what I thought too. Little discussion here of inflation, best hedges, and TIPs which Peter Cramer recommends. I’d hoped by posting the article to prompt a variety of views on those - particularly TIPS.
Last time I looked today the 10-year was yielding under 1.4%. I’d rather stick the money under the mattress than part with it for that kind of return. Talk about Ponzi. Only way that investment would pay is if rates fall even further or go negative. Really? Take a look in your local paper at rent and housing prices (as I just did) and than tell me you can get by with a 1,4% return.
The FT also noted this week that globally negative yielding debt has again topped $13 trillion - I tried to link that without success.
I'm not picking on you and I will say, without hesitation, that your intention here has always been honorable. You got side tracked by a link you believed to be creditable and fully to the FT original article.
Thank you for your continued contributions.
Catch
try the link tool that is provided with this forum software.
Open your target page in another tab, and copy the address you're at. Then type something like: dinky linky. Hi-light it with your mouse cursor, click on the little link icon there in your formatting screen, and copy your address into the little window that opens up.
Your FT article here:
Dinky linky.
Or you could use a service like tinyurl.com.
BTW, I hope you don't think I was giving you a hard time.
And I just bought a slug of TIPS. I balance it ought with an equal dose of a Fidelity bank loan fund. I forget the ticker.
To the Treasury Inflation-Protected Securities, TIPS, mentioned in the linked article.
Whilst the lonely and seldom mentioned TIP (inflation protected bonds) area is not spoken about very much in this mostly equity speak world, money may be made in this area; although some of the choices in the below chart have some large swings. The chart contains some TIP friends and other type of bond friends for reference.
So, one may throw away; for a moment, the inflation button relation of this investment area. The other 2 considerations being general notes, bills and bonds yields moving lower; as well as, and in connection with yields moving lower due to a flight to safety with these U.S. Treasury issues and not just from actions, or perceived actions of the Federal Reserve. Both of these circumstances, too, move TIP's pricing.
In the below chart, for a 1 year view; with the 10 year Treasury yield at 1.57%, as of 1-30-2020. The 10 year yield is also in the chart for 1 year, with the yield being 2.6% at 1-30-2019.
--- STPZ, Pimco, 1-5 years duration TIPS; 1 YEAR = +4.52%
--- TIP, I-shares etf; 1 YEAR = +9.25%
--- LTPZ, Pimco, + 15 year duration TIPS; 1 YEAR = +23.1%
--- EDV, Vanguard Extended Duration Bonds; 1 YEAR = +30.5%
--- ZROZ, Pimco Extended Duration Zero Coupon Bonds; 1 YEAR = +33.9%
CHART
Have a pleasant remainder,
Catch
I don’t perceive criticism of a flawed post as a personal affront. I’m glad the flawed post was called to my attention. Wouldn’t have posted it had I looked more closely. Wasn’t aware the link-shortening software was available here. So thanks to @WABAC for explaining that. Gave it a “test drive” on one of my older posts and it appeared to work.
Thanks @Catch22 for the thoughts.
Re The FT: - No intent to hold it up the as sacrosanct. It’s not. But I do suggest that it’s quite reputable and offers a somewhat different perspective from “across the pond” than we normally see here. We get plenty from Barron’s, The WSJ, NY Times - all great publications. And we get our share from CNBC, M* and Bloomberg. But, for whatever reason, little from the FT appears. So that’s why I’ve made some effort to fill the gap. Rightfully, they make it darned hard to re-post their stories. Newspapers have a tough road.
If I subscribed directly (rather than through Kindle subscriptions) it might be possible to link a limited number of stories per month for free. I’ve always preferred Kindle-based. So those free re-posts aren’t available to me. An earlier discussion of how best to subscribe to publications is linked below.
here
One would hope when owning either of those thru a fund that the ER on said fund is near 0. Otherwise, I can’t see where it would pay to own either the 2 year or the 10 year at those rates. Liquidity has some value ... hard to calculate or measure.