No. of Recommendations: 1
Hi guys,

Interesting article:

A low risk way to play this is in the agency MBS market. MBS are basically short calls on long-term rates. In other words, MBS are kind of like the old covered call strategy, which tends to work best when the market is mildly negative. Besides, agency MBS are likely to benefit greatly from improving liquidity. I wouldn't touch non-agency MBS period.

You might be able to play in TIPs here too. I'd think TIPs would catch a bid here, as inflation worries rise. Unfortunately, I think the problem in TIPs is oil. Since TIPs are based on total CPI, its possible that core inflation rises because the Fed is supplying too much money, and yet oil prices come off their all-time highs, resulting in total CPI which isn't any higher. So I'd avoid TIPs, especially if you are a long-term investor.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.