More by the Same Author
2012-04-27 TIPS for Value Investors: Whos Afraid of Negative Yields? by Jeremie Banet and Mihir Worah of PIMCO
Why wasnt the recent TIPS auction a blockbuster among Main Street investors? We believe they were frightened away by the -1.08% real yield. We would argue that the negative real yields that are explicit in TIPS also represent the implicit discount rate for ALL financial assets in the U.S. Moving away from TIPS into nominal yield is a bet on inflation being less than 2% for the next five years and less than 2.25% for the next 10 years a pretty bold bet!