Tuesday, October 26, 2010

TIPs selling off negative yields

So the big news in the world of TIPS (inflation protected bonds) is that they are selling off a negative yield.  To be clear, this is the real return, not the nominal return on these instruments.  The view is that investors are willing to accept a negative real return in exchange for at least some inflation protection.
My colleague, Steve Allen expands upon this...

HT: Mike (one of my students)