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The TIPS Market: TIP This

Tuesday, June 25, 2013 - 8:48 AM
The TIPS market has told an interesting story the past month. The implied inflation rate has collapsed. As of Monday morning, the market is pricing inflation at 1.94%%. A few month ago it was 2.5%.

The market is saying that when QE is in full force, with no end in sight, inflation expectations are high. When there is even a scent of QE being cut back, inflation expectations fall. The markets are therefore acting ‘rationally’.

That the market is repricing inflation lower must be killing Bernanke.

TIP this - Bruce Krasting
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ShorebreakShorebreak2,364 posts since
Apr 6, 2010
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