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2016-11-09

Flood of money into inflation protected bonds

In the bond sell-offs of 2013 and 2015, the difference between the nominal yield on 10-year US Treasurys and the real yield (which strips out the rate of inflation) was minimal, meaning market expectations of inflation were almost non-existent. 

Today that gap is expansive.

Fears about the damage wrought by inflation have propelled a flood of money into inflation protected bonds, with more than $1bn poured into the funds in the week to October 26 — the second largest weekly total on record, according to data from EPFR.


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