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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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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Join Date: Dec 2003
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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...
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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