tag:blogger.com,1999:blog-6616959642391988608.post1485319529519120574..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: TIPS valuation update (2)Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6616959642391988608.post-67209768958346277132009-11-25T13:08:30.048-08:002009-11-25T13:08:30.048-08:00What you're missing is that TIPS are complex i...What you're missing is that TIPS are complex instruments whose total return is dependent on three independent variables: inflation, initial real yield, and ending real yield. <br /><br />TIPS are a bargain relative to Treasuries because they are priced to the assumption that inflation in the future will be only 2% or so. If inflation is more than that, then TIPS held to maturity will beat a Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-62392999075939074472009-11-24T13:16:25.821-08:002009-11-24T13:16:25.821-08:00Scott,
On 11/18 you closed with the idea that TIPS...Scott,<br />On 11/18 you closed with the idea that TIPS are cheap relative to treasuries:<br />"So, while the first chart suggests that TIPS on a standalone basis are relatively expensive at current levels of real yields, they are a risk/reward bargain compared to Treasuries."<br /><br />In this post (11/19) you suggest TIPS stand to lose the most if the FED were to surprise with a ratepiefarmerhttps://www.blogger.com/profile/04596576632760958227noreply@blogger.com