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7 votes
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Is the US market really expecting less than 3% yearly inflation over the next 5 years?

The overall answer to your question is: yes, current market prices imply an expected inflation rate over the next 5 years of around 2.67%. Having said that, the market for TIPS is significantly less ...
Myggen--'s user avatar
4 votes

Why is VTIP not tracking inflation?

TIPS (and the ETFs that hold them) protect against unexpected inflation. IF you buy an individual TIPS bond, you are guaranteed a real rate of return - meaning the principal of the bond is increased ...
D Stanley's user avatar
  • 133k
3 votes
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Risk of bonds bought on the primary and the secondary markets respectively

What happens to A and B? Nothing will happen to A. TIPS rates are not based on short-term interest rates that the government sets, but a lookback of the CPI, so the principal and interest will not ...
D Stanley's user avatar
  • 133k
3 votes
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Example TIPS and how inflation rate affects its principal

According to the example, the inflation during year 2 (and measured at the beginning of year 3) was 2 percent. During year 1 it was 4 percent. 2 percent of $1,040 is $20.80. When you add the $20.80 ...
hmakholm left over Monica's user avatar
3 votes

Where are the prices of secondary market TIPS trades?

The US Department of the Treasury does not publish secondary market price data for TIPS. However, here are some other sources of secondary market price data for TIPS: Treasury Direct: You can view ...
Marvin C Brinkley's user avatar
2 votes
Accepted

Why is VTIP not tracking inflation?

TIPS are only inflation protected if you (or the ETF) holds them to maturity, and the average maturity in VTIP is 2.5 years, so many of those TIPS won't have matured yet (and VTIP will keep rolling ...
Michael A's user avatar
  • 1,948
2 votes

Why does the price of a TIPS bond not match the inflation adjusted principal near or at maturity?

TIPS are quoted as a percentage of the real (inflation-adjusted) principal, which is probably slightly less than 118.56 with 2 months to go. So you're paying 101.22% of that amount (plus any accrued ...
D Stanley's user avatar
  • 133k
1 vote

How can TIPS have negative real yields?

It's because the reported "yield" does not take principal increase into effect. The interest rate is fixed but the principal is adjusted with CPI changes. So if you buy a bond for $1,000, it ...
D Stanley's user avatar
  • 133k
1 vote
Accepted

Market risk for TIPs vs. I Bonds

Let's go one at a time through this. However, I want to make sure I understand when you can lose principal. With TIPs, you're only able to buy them on the secondary market (if not using Treasury ...
M Kupperman's user avatar
1 vote
Accepted

If TIPS yields are negative, why do TIPS ETFs have a positive yield?

[T]he VTIP ETF from Vanguard has a positive yield of about 1.2% right now. Are you sure? According to Vanguard, the 30-day SEC yield for VTIP as of 01/07/2021 is -1.44%: The yield quoted is the real ...
0xFEE1DEAD's user avatar
  • 8,498

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