No. of Recommendations: 11
The spread between the Treasury bond and the TIPS of the same maturity is the bond market’s prediction of inflation. At no time in the next 30 years does the bond market predict an inflation rate of 2% or less.
These are actual yields as of today from Fidelity’s secondary market.
Years to Maturity Treasury TIPS Spread
3mo 0.25 3.68% -5.44% 9.12%
6mo 0.5 3.75% -1.58% 5.33%
9mo 0.75 3.71% 0.09% 3.62%
1yr 1 3.73% 0.67% 3.06%
2yr 2 3.80% 0.85% 2.95%
3yr 3 3.82% 1.14% 2.68%
5yr 5 3.96% 1.35% 2.61%
10yr 10 4.31% 1.92% 2.39%
20yr 20 4.96% 2.60% 2.36%
30yr+ 30 4.91% 2.66% 2.25%
The bond market is predicting higher than 2.5% inflation in the < 5 year time frame but settles back to around 2.3% in the 5 to 10 year time frame.
The market is not pricing in the giant federal deficits.
Congressional Budget Office: Publication 62105For charts and active links go to
discussion.fool.com - What the bond market says about inflationWendy
