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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35357  
Subject: TIPS watch Date: 3/17/2006 1:51 PM
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Today's Wall Street Journal: "...the real reason long-term Treasurys rallied is they have become despised as an asset class. [so slightly lower-than-expected inflation news caused a bounce.]

... just about any survey of sentiment indicates bearishness toward bonds. Primary dealers -- the firms that deal directly with the Federal Reserve -- are, on balance, betting against the 10-year Treasury note...

...most Wall Street economists expect long-term rates will be higher in six months. In another sign of bearishness on long-term bonds, professional bond managers surveyed by ISI Group show a marked preference for short-term Treasurys."

http://online.wsj.com/article/SB114255695641600784.html?mod=mkts_main_featured_stories_hs

I am still deciding whether to buy TIPS, at the April auction. The yield of both the 5 and 10 year TIPS has risen, recently, to 2.01% and 2.15%, respectively (the principal is inflation-adjusted). This is still well below the 50-year average of "real" (inflation-adjusted) rates, on long bonds.
http://www.martincapital.com/chart-pgs/CH_mmnry.HTM

The inflation differential (the difference between the regular T-Note and TIPS yield) has dropped, over the past couple of weeks (to 2.61% and 2.52%, respectively).

Thoughts?
Wendy



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