Thursday, September 22, 2011

Twisted Twist Is Twisting TIPS

July 13, 2011
The Sarcasm Report v.112

One remaining rule: Under no circumstances go beyond 10 years.

Yes. By all means sit in short-term investments to meet your long-term needs. Do not take advantage of the steep yield curve to lock in higher long-term rates. Don't worry about the long-term future. Things are bound to get miraculously better once we get through this soft patch (of quicksand).

September 22, 2011
Bloomberg: Rates

5-Year 0.125 04/15/2016 103-29½ / -0.72 -0-15+ / 0.100 16:49

This supposedly safe short-term TIPS bond was down 0.45% today as short-term deflationary pressures appeared.

30-Year 2.125 02/15/2041 132-25+ / 0.86 2-16 / -0.083 16:49

This supposedly unsafe long-term TIPS bond was up 1.92% today as long-term growth expectations experienced yet another whack-a-mole event.


Stagflationary Mark said...

As seen here, the 30-year TIPS bond yield was 1.54% when Forbes told us "under no circumstances" should we buy long-term TIPS. The yield now stands at 0.87%.

That's 0.67% in extra interest per year for 30 years (about 20% more interest overall).

Epic financial advice FAIL.

Stagflationary Mark said...

Put another way, there was at least one circumstance that made buying long-term TIPS okay and somehow Forbes managed to miss it.

It *IS* the circumstance we are currently in now, lol.

Forehead. Desk. Whack. Whack. Whack.

Troy said...

URL says it all, LOL

Troy said...

But I do think if Perry wins next year there will be an awe-inducing inflation event created by the system, 2014-2016.

"Adding another zero" scale.

The conservatives aren't going to walk their talk.


Stagflationary Mark said...


You are such a tease!

Last Nationally Available 3% CD Is Gone

It sounds so final, lol. Sigh.

Stagflationary Mark said...


I just don't know what will happen. I continue to be rather inflation agnostic.

Let's talk about real yields instead. I doubt they'll be high enough to appease most retired savers.

Stagflationary Mark said...

I'm currently working on a post comparing 10-year treasury yields to average annual inflation over the previous 10 years.

So I find it very interesting that you shared the link about 10 year CD yields.