Introducing The U.S. 5-Year Yield Opportunity Index
Source: SeekingAlpha
2025-01-10 11:20:00 ET
Summary
- Inflation risk is topical again. As a result, the bond market is demanding a higher yield premium to compensate for the possibility that inflation will be higher than recently expected.
- The concept is to compare the nominal 5-year Treasury yield against an index of market-based inflation expectations and a model run by the Cleveland Fed.
- You can also earn a 2.0% real yield at the moment in an inflation-indexed Treasury (i.e., a 5-year TIPS).
Inflation risk is topical again, as I’ve been discussing this week . As a result, the bond market is demanding a higher yield premium to compensate for the possibility that inflation will be higher than recently expected. The question for investors: Does the run-up in Treasury yields to date suffice, given the current inflation expectations? In the first of a series of new indexes to help shed light on an answer, here’s a look at CapitalSpectator.com’s US 5-Year Yield Opportunity Index (YOI)....
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Introducing The U.S. 5-Year Yield Opportunity Index
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