Volatile TIPS

Just a few months ago I notices in a post that 5-year TIPS were yielding 0% before inflation. I remarked at that point, “Investors in the 5-year TIPS are accepting government reported inflation numbers as their future return”

Now look what has happened since then. The 5-year TIPS are now yielding 3.92% real before the inflation. The inflation component that Government will have to pay will be extra. The 5-year treasury is yielding 2.10%. Crazy times!

Here is the picture from Pimco.