Accelerated Capital Flows Into US Inflation Protected Bonds

After entering the market in 2016, the market was in turmoil. Investors felt deeply that "investment is not reliable, saving money means losing money".

Now, however, according to a new report from the Bank of France, investors who want to keep their values are likely to have a new way out of the US inflation - protected bond (TIPS).

Faxing bank said that as the US core inflation rate picked up and oil prices continued to rise, capital was accelerating into the hottest US inflation protected bond pactions in Wall Street.

First of all, how can TIPS keep inflation during inflation?

According to the definition of inflation protected bonds, the principal of a bond is adjusted accordingly according to the occurrence of national inflation, so the investor's principal will not depreciate with inflation.

On the basis of the adjustment of the principal with the inflation level, although the coupon rate remains unchanged, the interest earned by investors can be adjusted accordingly, which will ensure the future purchasing power of investors' principal and interest.

In addition, in the current market turbulence, oil and stock two cities have strong linkage, buying TIPS with low market relevance is also a wise choice.

This facilitates investors to diversify investment, reduce portfolio risk and increase total revenue.

In this sense, TIPS is indeed a rare investment target.

Although TIPS is the darling of Wall Street, it has also experienced the "cold palace" stage.

Alain Bokobza, head of global asset allocation at faxing, said: "deflation has been too strong and is now being normalized. Under such a background, capital inflow into us and European inflation protected bonds is entirely feasible."

The strategists have recently expressed concern that deflation has risen to a record high based on the index of news flow.

The recession of deflation also contributed to the flow of funds into high-yield bonds, and commodity prices continued to slack, leading to a wide spread of interest on such bonds.

At the end of 2015, Goldman Sachs, JP Morgan chase and Morgan Stanley and other agencies were bullish on US inflation protected bonds (TIPS) because they believed that market indicators reflecting medium-term price pressures were too low.

However, due to a new decline in crude oil, and

In the turmoil, profit and loss inflation continued to decline at the beginning of the year.

Just six weeks before the start of the new year, Goldman Sachs has already given up the strategy of buying inflation related bonds, and has cancelled four of the six trading proposals in 2016.

But since then, great changes have taken place in the environment.

Us core PCE

That is to say

The price index of preferences increased by 1.7% in January, reaching the highest level in nearly three years.

Higher oil prices have also boosted inflation prospects, and WTI crude futures have risen nearly 50% in recent months.