MORGAN STANLEY: ‘There’s A Storm Coming’ In The TIPS Market

Saturday, January 12, 2013
By Paul Martin

Matthew Boesler
Jan. 11, 2013

Morgan Stanley interest rate strategist Anton Heese’s latest note to clients comes with an ominous warning in its title:

“There’s a Storm Coming.”

Heese is referring to the market for Treasury Inflation Protected Securities, or TIPS. This class of government bonds – inflation-linked securities – was a clear outperformer in 2012. Heese points out that the Barclays World Government Inflation Bond index gained about 7 percent in returns last year, while Treasuries only returned 2.1 percent, Bunds rose 4.5 percent, and Gilts gained 2.8 percent.

Now, inflation-linked bonds – like Treasury Inflation-Protected Securities (TIPS) in the United States – are looking pretty expensive too, and that has Heese convinced that there is a storm coming in the TIPS market.

The Rest…HERE

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