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Use these simple visuals to help illustrate technical market perspectives to clients.
A real yield opportunity with TIPS
8/23/2023
Real yields on Treasury Inflation-Protected securities (TIPS) recently reached their highest levels since 2008.
Key takeaways:
- Short-term interest rates reached a 22-year high in July, reflecting the Federal Reserve’s (Fed’s) efforts to quash runaway inflation, a campaign that it began back in March 2022.
- With inflation generally slowing in 2023, the Fed’s efforts may be helping. However, it’s too soon to tell whether or not the U.S. economy has sufficiently cooled. Meanwhile, bond yields have risen sharply from early 2022 levels.
- This backdrop has created a silver lining for TIPS: the real yields at which these bonds trade are already adjusted for inflation, and they recently reached their highest levels since 2008.
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