No. of Recommendations: 17
As an tangential aside on the broad subject of US government interest rates--
It's not such a bad time to consider some TIPS. Maybe a little ladder with some of your money, for those who like not to worry too much?
Other than a few weeks here and there, the current 10-year real yield of about 2.41% is the highest in the last 24 years.
On the surface of things this is a little surprising...there are reasons to believe many people are a little more worried about inflation rising than was true a little while ago, meaning the extra protection offered might have been expected to drive TIPS demand up and yields down. But TIPS trading is thin, and not all participants have simple motivations.
Is inflation + 2.41% good? Two possible reasons I'd say so: (1) Less than five years ago it was -1.1%, so at least it's better. (2) I think there are many time horizons over which inflation+2.41%/year will be better than the S&P 500 real total return from here : )
Jim
