Traders expect inflation to get back
After several months of true anxiety regarding deflation, which caused many major banks to impose negative interest rates, lots of rumors arose that inflation might get back soon.
In the US and Great Britain many market participants keep arguing that inflation has already hit its bottom, so they’re going to protect their investment portfolios from surging consumer prices.
American treasury inflation-protected securities or simply TIPS are currently demonstrating the strongest demand for the last time, while TIPS exchange-traded funds have recently reported their best quarterly performance for twelve years.
TIPS purchases are currently recommended by huge asset managers Pimco and BlackRock as well as banks, including Morgan Stanley. Meanwhile, economists of City point out that low inflation, which has defined British and American economies for the last time seems to coming to its end.
By the way, even if inflation freezes, anyway purchasing a TIP will bring 70 basis points more than purchasing a nominal Treasury bond.