Thursday, May 19, 2022

TIPS Valuation Commentary — Brian Romanchuk

A quick glance at U.S. TIPS (inflation-linked bonds) shows that if we abstract past the thorny question of where inflation will be in the next few years, the market has largely reversed the relatively low inflation expectations that developed in the mid-2010s. If one believes that the inflation overshoot seen in recent years will be reversed within a reasonable time span, valuations are near a “fair value” based on historical data. (Of course, past performance is not indicative of future results, yadda, yadda, yadda.) If one is convinced that the secular tide on inflation has turned, TIPS might still be cheap on a longer-term basis....
Bond Economics
TIPS Valuation Commentary
Brian Romanchuk
http://www.bondeconomics.com/2022/05/tips-valuation-commentary.html

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