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Pimco and BlackRock Have a Contrarian Bet on Inflation --- Buy TIPS

davfordavfor
edited March 2019 in The Bullpen
A possible investment implication coming out of the Feds evolving inflation policy.....
....the fund giants say the central bank’s dovish pivot is a game-changer. A tight labor market, and the Fed’s willingness to consider putting off raising interest rates this year and letting inflation run hot, are bound to raise expectations and push up consumer prices. That means getting into inflation-protected Treasuries, commonly known as TIPS.
....the Fed not only scaled back its 2019 rate hike projections to zero, but also discussed the possibility of so-called price-level targeting. If the Fed took that approach, it would make up for years when prices rose less than 2 percent by allowing inflation to run higher than 2 percent in subsequent years, rather than letting past misses be bygones -- which it does now.
https://bloomberg.com/news/articles/2019-03-28/losing-bond-trade-makes-big-comeback-that-treasuries-can-t-match
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