NEW YORK: Global prices are poised to climb during the next three to five years as developed nations seek to reduce debt burdens, favouring Treasury Inflation Protected Securities
, according to Pacific Investment Management Co.
These, say the bank, will be the first ETNs to give investors the opportunity to take long or short exposure to changes in the market's expectations of future inflation implied by the difference in yields between a notional long or short position in US Treasury Inflation Protected Securities
(TIPS), and an offsetting notional position in US Treasury Bonds with approximately equivalent terms to maturity.
10-year notes and Treasury Inflation Protected Securities
and a trader's expectations for inflation widened to as much as 2.66 percentage points on April 20.
An MOF official remarked that price-indexed bond is a kind of treasury inflation protected securities
(TIPS), with a face value which can be adjusted along with change in consumer price index (CPI).
That expected inflation rate is consistent with the difference in interest rates between ordinary US government bonds and Treasury Inflation Protected Securities
. With such expectations, consumers have no reason to put off purchases.
In GAO's survey, investors reported increased demand for Treasury Inflation Protected Securities
(TIPS) and suggested ways for Treasury to further improve TIPS liquidity and thereby lower borrowing costs.
This product is Treasury Inflation Protected Securities
As for the primal market, the demand and offer ratio at the first of the four auctions, planned for this week in the volume of 78 bn USD, formed 3.1 times, which is significantly higher than July estimate when previously the Treasury Inflation Protected Securities
(TIPS) issue has been placed.
Hot TIPS Recommended Treasury Inflation Protected Securities
Mutual Funds Vanguard Inflation Protected Securities (VIPSX) 1-Yr Yield: 3.79% Expense ratio: 0.20% Minimum investment: $3,000 Telephone: 800-662-7447 American Century Inflation-Adjusted Bond (ACITX) 1-Yr Yield: 4.37% Expense ratio: 0.49% Minimum investment: $2,500 Telephone 800-345-2021 PIMCO Real Return D (PRRDX) 1-Yr Yield: 2.29% Expense ratio: 0.90% Minimum investment: $1,000 Telephone: 800-426-0107 SOURCE: MORNINGSTAR AS OF 06/26/09