At the beginning of the US stock market on Friday, March 26th, the break-even inflation rate of US 10-year inflation-protected treasury bonds (TIPS) rose by more than 5 basis points, reaching the high point of 2.37 15% since April of 20 13, which exceeded 2.37% for the first time in eight years.
The 30-year TIPS breakeven inflation rate rose by about 3 basis points, refreshing the high level since 2065438+September 2004 to 2.3258%; The breakeven inflation rate of 20-year TIPS rose by more than 4 basis points, reaching 2,065,438+the highest point since August 2004 of 2.3255%.
The breakeven inflation rate of TIPS rose by more than 8.2 basis points in two years, reaching a new high of 2.7470% since May 2007, and by more than 6.5 basis points in five years, reaching a new high of 2.6583%. March 17 was the highest since July 2008, accounting for 2.67 19%.
The analysis points out that the expected increase of short-term inflation is more prominent, and the absolute level of breakeven inflation rate is higher than the longer end of the curve of 10 and 30 years, which indicates that the market thinks that the increase of inflation rate will be short-term.
Contrary to the panic during the epidemic, the market inflation expectation has been rising since 20021. According to Bloomberg statistics, the breakeven inflation rate of 10 TIPS bottomed out to nearly 0.47% last year, which was a 30-year low of 0.94% last year.
Inflation-protected treasury bonds are usually purchased when investors think that high inflation is coming. TIPS yield is usually considered as the actual bond yield. Under the weight of last year's epidemic, all maturities are negative. TIPS breakeven inflation rate is the difference between nominal bond yield and TIPS yield in the same period, which measures investors' inflation expectations.
Reuters once pointed out that two key market indicators, the US TIPS yield and Eurodollar futures, are rising together, which indicates that with the acceleration of COVID-19's vaccine listing, the market expects a strong economic recovery in the second half of this year, making the Fed's tightening policy imminent.
However, if the number of unemployed people in the United States remains high, the Fed may not get rid of the ultra-loose monetary policy as the market presupposes. The Wall Street report also mentioned that the key goal of the Fed is constantly shifting from the inflation task to full employment:
According to the official statistics of the U.S. Treasury Department, only the 30-year real rate of return turned positive in mid-February, and others were still in the negative range. However, the 10 and 30-year TIPS yields have increased by at least 40 basis points this year, at least the highest level since last July.
Gennadiy Goldberg, a senior interest rate strategist at TD Securities in new york, said: "The high TIPS yield shows that the market is somewhat worried about the rapid pace of economic recovery, so the Fed is expected to withdraw from monetary easing sooner."