Inflation Protected

The sharp sell-off in long duration bonds (ticker TLT) has reached the collapsed 130-day complexity that implies a probable and playable rebound. More strategically, long-duration bonds yielding close to 5 percent are an excellent structural investment assuming central banks choose to slay inflation and the cost is a near-term recession. We discuss how to time and how to play the potential rebound.

We present our Portfolio Allocation Summary for October 2023.

The implications of this morning’s CPI report for Fed policy, Treasuries and TIPS.

In this report, we review our European fixed income strategy recommendations ahead of tomorrow’s critical ECB meeting

Our Portfolio Allocation Summary for September 2023.

A global portfolio is likely to return only 5.3% a year over the next decade, compared to 6.7% in the past. Investors either need to lower their return expectations, or take more risk. Our total return methodology remains consistent with previous editions, with changes limited to the Alternatives section.

In this report, we assess the best opportunities in inflation-linked bonds in the major developed economies, based on trends in growth, inflation and the stance of monetary policies in each country. We conclude that the environment is turning more challenging for European inflation-linked bond performance versus nominal government bonds, while the opposite is true in Japan. In the US, US TIPS breakevens have likely peaked, particularly at the short end.

Some thoughts on this morning’s inflation number and implications for Treasury yields and TIPS.

Our Portfolio Allocation Summary for August 2023.

This week we preview the July FOMC meeting, provide an update on the Fed’s balance sheet and recommend a new TIPS trade.