VTIP News and Press, Vanguard Short-Term Inflation-Protected Securities From 09/27/22

Summary A market collapse is nothing but risk-aversion meeting an inadequate risk-premium; rising yield pressure meeting an inadequate yield. Value is not measured by how far prices have declined, but by the relationship between prices and properly discounted cash flows. My ad...

Summary The U.S. Federal Reserve delivered its third straight 75-bps rate hike on Wednesday. Based on the Fed's updated economic projections, the growth outlook is for a weaker economy over its projection horizon versus its June update. We know policy works with a lag, and inf...

Summary Federal Reserve Chairman Powell delivered another forceful message to markets that an early pivot back to rate cuts will not happen until inflation is under control. However, there is still an element of wishful thinking in the Fed’s forecasts and rhetoric that part...

Summary The Federal Reserve delivered another outsized rate increase at today’s FOMC meeting, raising the Fed Funds target by 75 basis points to a new range of 3.00%–3.25%. In early 2008, the Fed was cutting rates due to the financial crisis and great recession, whil...

Summary After several years of steady growth and low inflation, policymakers now face a delicate tradeoff between bringing down inflation or sustaining economic growth amid heightened macro and market volatility. We expect the Fed to remain committed to aggressive rate hikes. ...

Summary The recent August print showed that consumer prices continued to rise year over year – albeit more slowly than prior months. We have remained a bit more cautious than the market’s consensus inflation expectations. We’re not convinced that inflation...

Summary TIPS inflation factor can decline temporarily, even when inflation is high. We expect individual ultrashort TIPS to outperform ETFs for TIPS with maturities less than 5 years during the next several months. Of the three reviewed TIPS (VTIP, STIP, and PBTP), PBTP seems ...

Summary The financial markets were shocked by the US CPI for August. The evidence continues to accumulate that inflation is now in a downward trend. The monthly chart shows that the numbers remain very high relative to everything over the past twenty years prior to the past fe...

Summary The new regime of macro volatility is playing out with weaker growth, persistent inflation and volatile markets. We stick with our dialed-down risk stance. U.S. stocks slumped and yields surged on a renewed rise in core inflation. We’ve argued inflation will be pers...

Summary Nobody knows how high interest rates have to rise in order to slow and ultimately reverse the recent rise in inflation. Only excess money causes inflation, and there seems to be a lot less of it recently, which is great news. Supply chain bottlenecks are clearing up ra...