WSJ: Higher Inflation Expectations Could Be Boon

snip

Viewing the Fed this way, many are keen on Treasury Inflation-Protected Securities, or TIPS, a segment of the Treasury bond market whose value increases with higher inflation.

This month, the 10-year breakeven rate--a measure of the yield difference between 10-year Treasury notes and 10-year TIPS--rose to 267 basis points, its highest level since May 2006.

That move, which suggests investors expect the U.S. inflation rate to average 2.67% on an annualized basis over the next decade, reflected concerns that the Fed's newly announced "quantitative easing" stimulus program will accelerate the advance in consumer prices.