$/gold/TIPs/conventional treasuries

September 8, 2009 12:36pm by

In response to the move lower in the US$ and move higher in gold and other commodities, the implied inflation rate in the 5 yr TIPS has risen 1.4%, up 10 bps from Friday and at the highest level since Aug 11th. The implied inflation rate in the 10 yr TIPS is up to 1.86%, up 8 bps from Friday and at the highest level since Aug 21st. This begs the question of course of why the conventional Treasuries which are not protected from inflation continue to trade so well in the face of the above in addition to the 50% rally in stocks and huge Treasury supply. What growth expectations are they implying past the knee jerk bounce in Q3 GDP or is it something else?

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