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TYD - Inflation Has Averaged 2.14% Over The Past 4 Years
Direxion Daily 10-Yr Treasury Bull 3x Shrs
Yes, I know that that is CPI inflation, and the PCE inflation rate (1.74%) has undershot the Fed's 2.0% over the past 4 years. That's not my point.
Rather, I'd like to revisit some criticism I got in the comment section over the past 4 years, when I began to argue that TIPS spreads seemed slightly biased by a liquidity premium. Because conventional Treasuries are slightly more liquid than TIPS, it seems that investors are willing to accept a slightly lower rate of return on Treasuries. Thus the TIPS spread slightly underestimates the market's expected