One sign that the market may be turning skeptical on the battle against inflation is found within this chart. This chart plots the RELATIVE performance of TIPS against US Treasuries (as measured by
IEF
). While bond funds in general have been under pressure against stubbornly higher rates, it is the relationship here that catches the eye. Breaking out of a pennant, this TIP/IEF ratio is now poised to approach levels that have represented meaningful ceilings in prior markets.
IEF
). While bond funds in general have been under pressure against stubbornly higher rates, it is the relationship here that catches the eye. Breaking out of a pennant, this TIP/IEF ratio is now poised to approach levels that have represented meaningful ceilings in prior markets.
Comment:
6 months later and despite a quick check-back to the top of the channel, this indicator is still not evidencing any signs that inflation has been "whipped".