SPIP - Maturity Walls Need To Hurt For SPIP To Do Well
2024-03-08 12:00:54 ET
Summary
- The SPDR® Portfolio TIPS ETF (SPIP) is sensitive to real rates and won't perform well if rates remain high while inflation falls, especially on longer horizons.
- Short-term evolutions won't favour SPIP much as it is essential for the Fed to keep rates higher than inflation and be sticky with it.
- It really depends on how factors affecting Fed transmission change, and we think a decisive factor could be the impact of the 2024 and 2025 maturity walls.
- If maturity walls create a major recessionary pressure, rates, which now have space to do so, could plummet, while inflation declines (most likely into targets) but is mitigated by deglobalisation.
- The resilience of the economy so far makes us wonder if maturity walls can be bad enough.
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Maturity Walls Need To Hurt For SPIP To Do Well