Inflation-Linked Treasuries Face Key Test After Bruising Month

  • 📰 BNNBloomberg
  • ⏱ Reading Time:
  • 45 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 21%
  • Publisher: 50%

Loans Loans Headlines News

Loans Loans Latest News,Loans Loans Headlines

The market for Treasury Inflation-Protected Securities is teaching investors a harsh lesson about interest-rate risk, ramping up the focus on this week’s auction of the debt.

Despite sticky price pressures, long-maturity TIPS are on track for their biggest monthly loss this year. Investors have driven up yields on all manner of long-dated bonds this month amid concern over the Treasury’s swelling borrowing needs and — ironically for TIPS — the risk that inflation may spike again or not decline smoothly.

The auction comes the day before a potentially pivotal speech by Federal Reserve Chair Jerome Powell. With inflation stripped out, TIPS serve as a pure read on the economy’s prospects, and investors expecting growth to slow after more than 5 percentage points of Fed tightening may look to buy. There are signs, however, that plenty of others are likely to need convincing, as TIPS-focused mutual funds are mired in a lengthy streak of outflows.

The Bloomberg US Treasury Inflation-Linked Bond Index is up about 0.1% in 2023, after a record rout of almost 12% last year. An index of TIPS maturing in 15 or more years is down about 6% this month. Some investors may also be wary of Thursday’s 30-year offering as an auction of 10-year TIPS in July is now under water. That sale, marked by strong demand at a yield of 1.495%, compares unfavorably with the current yield around 1.9%.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 83. in LOANS

Loans Loans Latest News, Loans Loans Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Peter Hall: Why the Bank of Canada should ignore the July inflation spikeIt’s preliminary at best to conclude that the latest inflation data force the Bank of Canada into further interest rate increases. Read on.
Source: financialpost - 🏆 7. / 85 Read more »

Peter Hall: Why the Bank of Canada should ignore the July inflation spikeIt’s preliminary at best to conclude that the latest inflation data force the Bank of Canada into further interest rate increases. Read on.
Source: fpinvesting - 🏆 43. / 63 Read more »