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Negative real rate on 5-year TIPS
Old 02-29-2008, 03:15 PM   #1
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Negative real rate on 5-year TIPS

The real rate on 5-year TIPS turned negative today.

Bloomberg Rates

So, in effect, the market is willing to pay a premium for a zero-coupon 5-year TIPS. I haven't seen this before. Comparing to nominal TIPS, it look likes an embedded inflation forecast of about 2.5%. Any thoughts on what this means?
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Old 02-29-2008, 04:44 PM   #2
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We see negative real yields once in a while.

http://www.early-retirement.org/foru...way-14407.html

But I don't think I've seen it for the 5-year before. It's just a reflection of the flight to safety in treasuries. The fed is pushing yields into negative territory on the short end, but the market is pushing down yields on the longer maturities due to fear.
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Old 03-01-2008, 01:48 AM   #3
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Quote:
Originally Posted by FIRE'd@51 View Post
Comparing to nominal TIPS, it look likes an embedded inflation forecast of about 2.5%. Any thoughts on what this means?
Could you explain what is meant by "nominal TIPS"?
Ha
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Old 03-01-2008, 10:11 AM   #4
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Could you explain what is meant by "nominal TIPS"?
Ha
Typo - I meant nominal Treasuries.
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Old 03-01-2008, 11:59 AM   #5
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Thnx-
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Old 03-01-2008, 12:03 PM   #6
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I thought for a minute the feds had come up with something to help people that were undecided about whether to buy nominal treasuries or tips and just couldnt make up their minds...
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