VTIP News and Press, Vanguard Short-Term Inflation-Protected Securities From 11/11/22

Summary The stock market has already endured a major correction over the past 12 months and could be headed back to pre-pandemic levels. The real estate market has been suddenly frozen by the rapid pace of the Fed's interest rate hikes. Home prices are now starting to drop and...

Summary With policy rates now meaningfully above neutral, the first phase of the tightening process is finished—and apparently successful. With the Fed’s credibility intact, it can move to a new phase: rolling out more rate hikes but at a slower pace. We expect t...

Summary The recent rise in real yields for inflation-indexed Treasuries (TIPS) looks compelling for locking in relatively attractive payout rates, but the usual risks with bonds still applies. History suggests that buying and holding this 50-50 mix is attractive when the sum ...

Summary Since the peak in early June, $196 billion in Treasury securities have rolled off the Fed’s balance sheet, reducing the balance of Treasury securities to $5.57 trillion, the lowest since November 17. Since the peak, the balance of MBS had dropped by $62 billion. ...

Summary The global economy has been hit by several headwinds, almost all of them leading back to higher inflation. Europe is likely already in recession, the U.S. will enter recession in Q2 2023, while China struggles to make recovery headway. Markets have faced up to the reality ...

Summary Barclays Aggregate is down almost as much as the S&P 500 YTD. As of 10/31/22, the YTD return on high yield is far better than the return on corporate high-grade. There is relative value being created in the various bond market asset classes. Looking at th...

Summary A super-strong dollar, collapsing housing and commodity prices, and a huge increase in real interest rates were all but shouting at the Fed to back off and give the economy some time to digest things. If the Fed had been paying attention to the slowdown in M2, they would h...

Summary With a real yield to maturity of almost 2%, holders of the TIP ETF will likely handsomely outperform inflation over the coming years. The TIP's relatively low duration suggests future returns are likely to be particularly impressive in risk-adjusted terms when compared to ...

Summary Good, but not as well as hoped. Inflation-hedge ETFs have generally been successful in minimizing losses during the current inflationary environment, less so at generating positive returns. An overview of some of these funds and their performance follows. A...

Summary I have said for weeks that the Fed needs to slow the pace of its tightening campaign. Powell apparently decided last week that the market was taking things too far. Corporate earnings are being released for the quarter and, so far, they aren’t that bad. It w...