Post #3804 by WendyBG on the Macroeconomic Trends and Risks board

Personal Finance Topics / Macroeconomic Trends and Risks

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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.
https://www.cbo.gov/publication/62105

For charts and active links go to https://discussion.fool.com/t/what-the-bond-market...

Wendy

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