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Two Ways: Bond Funds Seek Out TIPS


Strengthen your portfolio in good times and bad.

TIPS of the Day

Consumer inflation plunged by the highest amount in sixty years, the Department of Labor said last Thursday. But still, that hasn't prevented the world's largest bond funds from seeking protection from rising prices.

According to Bloomberg, one day after the Labor Department said the consumer price index fell by the most since 1950, Blackrock issued a special report on why investors should seek out TIPS, or Treasury Inflation Protected Securities. PIMCO's Bill Gross, manager of the world's largest bond fund, also thinks TIPS are appealing but describes Treasuries as one of the worst places to invest. Meanwhile, Vanguard's Kenneth Volpert also believes in the inflation theme which he thinks isn't currently priced in. Together, the three firms manage over $1.5 trillion in bonds.

See Professor Lance Lewis's Why Gold Is the One Commodity You Need to Own.

From the Bull Pen: For those that want exposure to TIPS through the equity markets, consider the iShares Barclays TIPS ETF (TIP). But if you believe government statistics have been understating inflation, the gold ETF (GLD) may also be an option on this pullback to $90. A sell stop can be set 2% below that level.

From the Bear Cave: Bears are eyeing the retail ETF (RTH). The failure at $82 could have been a double top, and those playing the downside can set a buy stop above $79.

Quick Check Around the World

Asian trading closed with the Hang Seng 0.77%, India -1.35%, Shanghai 0.55%, Nikkei 0.41%, and Taiwan 1.77%.

Glancing towards Europe, we see the FTSE -1.25%, CAC -1.71%, DAX -1.34%,

As of 8:30 AM EST, S&P Futures are trading -8.8 to 906.90 and Nasdaq futures are -12 to 1451.75.

A Look at Commodities

Over in commodities, crude oil is trading -1.14 to 68.41 while gold is -10.5 at 925.70 this morning. Silver is -0.380 to 13.82 and copper -4.90 to 220.15.

The dollar index is +0.485 to 81.1150.

No events on the radar today. But click here for the full week's events.

Welcome back! Good luck and have a great week!
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No positions in stocks mentioned.

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