Amid Bond Rally, The TIP ETF Got Crushed. Why?

Summary

  • The TIP ETF has lost more than 6% of its value in a few days, and is falling sharply again this morning.
  • A key reason is that inflation expectations are plummeting, causing the TIP ETF price to fall versus the overall bond market.
  • The market is pricing in a severe recession. But individual TIPS are a much better investment than nominal Treasurys. And TIP funds and ETFs  are looking more attractive.

Investors in the TIP ETF – an index fund that holds the full range of Treasury Inflation-Protected Securities – got a big surprise this week: a stunning 6.2% drop in value amid a what appeared major “safe haven” Treasury rally.

Why did that happen?

Read my full analysis on SeekingAlpha.com

TIP versus Treasury Market

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About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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