Investors have rushed to snap up inflation-proofed US government bonds in the wake of last week’s Federal Reserve meeting, which analysts say indicated that officials are willing to tolerate higher inflation before tightening monetary policy more aggressively.
The recent recovery of oil prices — a barrel of West Texas Intermediate crude last week rose above the $40 mark for the first time since December — has helped support so-called “Tips”, Treasury bonds that are protected against inflation, but the dovishness of the US central bank has poured more fuel on the rally.
“Just when it seemed like Tips had entered an abyss, they threw a surprise party,” Bank of America Merrill Lynch analysts wrote in a research report.
The price of the 10-year Tips bond rallied 1.7 per cent last week, pushing the yield to a one-year low of 0.26 per cent. BlackRock’s flagship Tips exchange-traded fund enjoyed its strongest weekly rally since March 2015.
So-called “break-even rates”, which are often seen as a gauge of expected inflation derived from comparing the yields of conventional and inflation-proof Treasuries, have jumped this month, and climbed even higher in the wake of Wednesday’s Fed meeting.
The 10-year break-even rate rose to 1.62 per cent last week, the highest since December. The five-year rate rose to 1.52 per cent, the highest since last summer. And the two-year climbed to 1.64 per cent — the highest since July 2014.
Rising break-evens reflect a sharp shift in investors’ views on inflation, brought on by the recovery in oil prices, accelerating “core” US inflation — which exceeded expectations for a second month running to climb to an annual rate of 2.3 per cent in February — and the Fed’s increasingly cautious stance.
The Fed now foresees just two quarter-point increases in its interest rate corridor in 2016, compared to four previously, and has pared its forecasts for 2017 and 2018 as well. Money managers say these were significant revisions that indicate a shift in the Fed’s thinking towards stronger acceptance of letting inflation accelerate above its 2 per cent target. Chris Iggo, head of fixed income at Axa Investment Managers, said he now expected the 10-year US break-even rate to climb to 2 per cent.
“The signals are clear,” he wrote in a note to clients. “The Fed is happy to allow core inflation to run higher before it really tightens because of the risk of a weaker international environment having some kind of stalling impact on the stronger US domestic economy.”
Fed chair Janet Yellen hinted at this at the Wednesday press conference. “We are not trying to engineer an overshoot … but it is a symmetric objective,” she said, indicating that officials were as comfortable with inflation accelerating above that mark as staying below.
近期油价回升：上周，西德克萨斯中质油(West Texas Intermediate, WTI)自去年12月以来第一次升破每桶40美元。这为美国财政部发行的“通胀保值债券”(Tips)提供了支撑，而美联储的鸽派立场更有火上浇油的作用。
目前，美联储预测，在2016年的利率走廊中将仅仅加息两次，每次25个基点——之前预测为4次——并降低了对2017年和2018年的加息预期。基金经理们表示，这些重大调整表明，美联储的想法变得更愿意容忍让通胀率加速升到2%以上。安盛投资管理公司(Axa Investment Managers)固定收益主管克里斯?伊戈(Chris Iggo)表示，现在他预计10年期美国盈亏平衡通胀率将上升到2%。