second best month for the asset class since 1998 - investors are preparing for inflation before
Berlin - Inflation-linked bonds have earned good returns to investors in March. In the United States threw papers from incorporating protection against inflation (TIPS) 6.1 percent. According to the index data Merrill Lynch & Co. is the highest yield since the Treasury went 1997 for the first time such securities. World-wide, inflation-protected bonds, or "linker" called the second best month since at least ten years. They came, including reinvested interest on a yield of 4.3 percent.
investors are adapting to rising inflation, since central banks worldwide pumped huge amounts of money into the economy to combat the recession. They fear the banks may have problems getting inflation under control, if the economies recover. "From talking to customers, we know that the fear of Hyper-inflation is widespread, "wrote strategists at UniCredit also. On average, the Fed, the Bank of England and the ECB expanded the money supply in the past twelve months by 9.2 percent. In the U.S., consumers could prices by four percent or rise more, said Brian Weinstein, of BlackRock.
The governments and central banks in the 19 largest industrialized countries have an average of 43 percent of their gross domestic product to combat the crisis used, the International Monetary Fund reported on 6 March. "to pump money into the system, is very inflationary, "said Kenneth Volpert, a fund manager at Vanguard Group Inc." The TIPS continue to have their noses in front. "
Here are the inflation expectations of TIPS investors - in terms of yield premium over traditional government securities - under the historical average and the prime rates. The so-called break-even rate for ten-year government bonds indicates that investors expect on average over the next ten years with an inflation rate of 1.43 percent, 0.63 percent points below the average for the past decade of 2.06 percent. The break-even rate indicates how much would the price of both securities down, so they have an equal income.
contrast predicted 29 economists in a Bloomberg survey that inflation in the year-end 2011 from 0.2 percent in February increases to 2.4 percent would. Even investment legend Warren Buffett warns that the support programs will bring a lot more inflation. The oil price has already climbed over the low point of 32.40 dollars per barrel by 65 percent. And in the first quarter, the Standard & Poor's GSCI Index of 24 raw materials has risen for the first time since June. This means that there are the prices of securities with built-in inflation protection upside potential.
Even drops in the U.S., the share of inflation-protected securities on the market for government bonds. He has fallen from eleven percent in July to less than nine percent of the market. "Globally, inflation in the years to attract. Go On the supply side Emissions of TIPS compared to total government bonds sharply back. From the basic linker are very attractive, "said Mickael Benhaim, head of international bonds at Pictet & Cie bankers. The high demand has in recent weeks, even at € linker bonds (see table) lead to lower returns.
In United Kingdom and that there was too little inflation-protected bonds. Their volume amounts to about 180 billion pounds (198 billion euros) or 23 percent of the valid volume. A year ago the share was at 30 percent. In the euro area, the proportion to seven percent of the outstanding government bonds, compared with 7.2 percent a year ago.
Investors flocked to the 18th March in the TIPS after the Fed plans to stimulate the economy announced as the redemption of government bonds, TIPS and mortgage-backed securities. "The plans of the Fed have the basis for a recovery associated with inflation down," said Jim Caron of Morgan Stanley. "Inflation will be difficult to bring under control."
Source: World-online
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