May 22 (Bloomberg) — U.S. inflation-indexed bonds are outperforming Treasuries this year, recovering from unprecedented losses in 2013, even as consumer prices have stayed in check through the sluggish U.S. economic recovery of the past five years.
Fixed-rate securities fell after a report showed existing- home sales in the U.S. increased in April for the first time this year. The U.S. will sell $13 billion of Treasury Inflation Protected Securities at 1 p.m. The debt has returned 5 percent in 2014, versus 3 percent for conventional securities, according to Bank of America Merrill Lynch indexes.
"TIPS look attractive versus nominals," said Stanley Sun, a New York-based strategist at Nomura Holdings Inc., one of 22 primary dealers that trade with the Federal Reserve, said in a phone interview. 'They have done well this year because of the broader rally in Treasuries, but they are still cheap.''
The difference between yields on 10-year notes and same-maturity TIPS, a gauge of trader expectations for consumer prices over the life of the debt known as the break-even rate, was 2.17 percentage points. The average for the past decade is 2.21 percentage points.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
- Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
- Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
