TIP: A Play On Commercial Real Estate Credit Events

(8min)

Summary

  • High for longer with the Fed likely to err on the side of caution isn't going to be great for TIPs, even relative to unindexed bonds when inflation starts falling.
  • A possible area where TIP would do well is if there's a credit event in commercial real estate that forces the Fed to consider its growth mandate more.
  • However, how a credit event would ripple through the economy is almost impossible to predict, where the impact on the wider economy would be a factor for TIP performance.
  • Durations are even quite long on TIP, so we'd stay away as markets come to grips with higher for longer.
  • Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More »

Inflation

JLGutierrez

The iShares TIPS Bond ETF (NYSEARCA:TIP), like most other fixed income REITs, are not a slam dunk in an environment where it looks like it's going to be higher for longer. While indexed to inflation, there's no

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