The $1.1 trillion investment firm PIMCO bet against a Japanese-style deflation in the US. Last spring, Pimco sold 10-year options on the CPI called "inflation floors. " This is a bet that the consumer price index for all urban consumers will be flat to higher at the end of the period. It's also a source of income in this low-rate environment.
http://noir.bloomberg.com/apps/news?pid=20601010&sid=aqqEDrWMDO3w
5 comments:
I remember getting into an inflation vs. deflation row with "anonymous" on this blog back in '09. It simply took time for the major trend of inflation to return. While (reconstructed) M3 has been in a down trend since about April/May of 09, it appears to have bottomed.
Lock in those mortgage, bond rates while your can because here come the 1970's!
Deb, is there a preferred way for small investors to play this; TIPS, equities, or short treasury ETF's or the already record high yellow metal, or just go buy the PIMCO fund?
How about an ETF that tracks unleveraged investments in the Dow Jones-AIG Commodity Index?
iPath Dow Jones-AIG Commodity Index (nyse: DJP).
Hello Deb,
Did you notice that the Brazilian Yield Curve Inverted- (10yr - 3mo) was negative - a few days ago.
It is now positive.
Can we expect a recession in Brazil in 6- to 12-months?
Can we rely on the High Yield Bond Spread to warn us of trouble in Brazil/Emerging Market area?
Thanks for the iPath Dow Jones-AIG Commodity Index (nyse: DJP)idea.
Dear Anonymous, yes to both. Deb
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