LONDON WALLET
  • Home
  • Investing
  • Business Finance
  • Markets
  • Industries
  • Opinion
  • UK
  • Real Estate
  • Crypto
No Result
View All Result
LONDON WALLET
  • Home
  • Investing
  • Business Finance
  • Markets
  • Industries
  • Opinion
  • UK
  • Real Estate
  • Crypto
No Result
View All Result
LondonWallet
No Result
View All Result

Here’s why it’s time to buy this inflation-protected investment, UBS says

Chaim Potok by Chaim Potok
August 24, 2023
in Investing
Here’s why it’s time to buy this inflation-protected investment, UBS says
74
SHARES
1.2k
VIEWS
Share on FacebookShare on Twitter


UBS has gotten bullish on 5-year Treasury inflation-protected securities. The Wall Street firm upgraded the 5-year securities, known as TIPS, to most preferred from neutral on Wednesday. The yield on 5-year TIPS hit 2.24% on Wednesday, the highest real yield the sector has seen in over 15 years, said Leslie Falconio, head of fixed income strategy in UBS Americas’ chief investment office. The yield eased slightly Thursday and was last at 2.15%. Bond yields move inversely to prices. “While we cannot say that this is the high in real yields over the next two months, we do feel confident that real yields will trend lower at year-end and into 2024,” Falconio wrote in a note to clients. US5YTIPS YTD mountain Yields on 5-year TIPS Investors worried about rising prices began flocking to TIPS in 2021 to protect against inflation. The principal portion of the securities rise and fall alongside the movement in the consumer price index. However, investors fled TIPS in 2022 when they bet on the success of the Federal Reserve in slowing the pace of inflation. While inflation expectations are a driver of performance, so are U.S. nominal interest rates, Falconio explained. TIPS yields account for inflation, but Treasury yields are nominal and don’t take inflation into account. “While investors were confronted with historically high inflation, TIPS proved to be a disappointment as the interest rate component dramatically underperformed,” she said. Real yields are now rising over optimism that the Fed will be successful in avoiding a recession in the coming quarters and that it will be able to keep rates higher for longer, Falconio said. Those higher real yields also have been a contributor to rising nominal yields, she said. “This shift to a more hawkish Fed path is now priced into the market, creating a more attractive entry point as it relates to the interest rate component of TIPS performance,” she wrote. “While inflation is expected to continue its downward trend, the inflation risk premium remains in positive territory.” Falconio specifically likes the 5-year TIPS not only for its yield, but because it is more heavily influenced by short-term sentiment, like shifting monetary policy or the price of oil. “And while we believe the Fed is holding a higher-for-longer stance, we also believe it is nearing the end of its tightening cycle, supporting the TIPS market (tightening is a headwind to inflation),” she said. “While lagged, the large rise in real yields will take a toll on financial conditions, and we believe the outflow of TIPS funds over the past year will reverse.” — CNBC’s Michael Bloom contributed reporting.



Source link

You might also like

Nasdaq 100 momentum unmatched since 1999 so brace for a shakeout, says BTIG

This big bank stock still has upside ahead despite its 20% year-to-date rally, investor says

This is one of the most attractive opportunities for income, Vanguard says. Here’s what the firm likes

Share30Tweet19
Previous Post

Altria raises quarterly dividend by 4.3% to 98 cents a share

Next Post

Vladimir Putin sends ‘condolences’ to Yevgeny Prigozhin’s family

Chaim Potok

Chaim Potok

Recommended For You

Nasdaq 100 momentum unmatched since 1999 so brace for a shakeout, says BTIG
Investing

Nasdaq 100 momentum unmatched since 1999 so brace for a shakeout, says BTIG

July 21, 2025
This big bank stock still has upside ahead despite its 20% year-to-date rally, investor says
Investing

This big bank stock still has upside ahead despite its 20% year-to-date rally, investor says

July 21, 2025
This is one of the most attractive opportunities for income, Vanguard says. Here’s what the firm likes
Investing

This is one of the most attractive opportunities for income, Vanguard says. Here’s what the firm likes

July 21, 2025
These stocks are set to move the most on earnings this week
Investing

These stocks are set to move the most on earnings this week

July 21, 2025
Next Post
Vladimir Putin sends ‘condolences’ to Yevgeny Prigozhin’s family

Vladimir Putin sends ‘condolences’ to Yevgeny Prigozhin’s family

Related News

10 of the prettiest double-fronted London homes for sale now – all but one under £1m

10 of the prettiest double-fronted London homes for sale now – all but one under £1m

January 28, 2024
Wintermute transfers M FDUSD since depegs, in M arbitrage opportunity

Wintermute transfers $75M FDUSD since depegs, in $3M arbitrage opportunity

April 3, 2025
Woman with pram seriously injured in hit and run

Woman with pram seriously injured in hit and run

February 4, 2023

Browse by Category

  • Business Finance
  • Crypto
  • Industries
  • Investing
  • Markets
  • Opinion
  • Real Estate
  • UK

London Wallet

Read latest news about finance, business and investing

  • Contact
  • Privacy Policy
  • Terms & Conditions

© 2025 London Wallet - All Rights Reserved!

No Result
View All Result
  • Checkout
  • Contact
  • Home
  • Login/Register
  • My account
  • Privacy Policy
  • Terms and Conditions

© 2025 London Wallet - All Rights Reserved!

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?