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How have bonds been reacting to recent economic enthusiasm?

*The Wall Street Journal, by Daniel Kruger and Sam Goldfarb, January 8, 2018

”A measure of the bond market’s expectations for inflation crossed a key threshold in the past week, highlighting investors’ renewed economic enthusiasm.

The 10-year inflation break-even rate, which reflects the yield premium on the 10-year-U.S Treasury note over the comparable Treasury inflation-protected security, topped 2% on Tuesday for the first time in more than nine months, according to Thomson Reuters.

The break-even rate has climbed in recent weeks as investors bought treasury-inflation protected securities, or TIPS, and sold regular Treasurys, a typical strategy when they see a risk of rising inflation.

Signs investors are concerned about higher inflation aren’t confined to the bond market. Commodities such as oil, copper and aluminum – which are key industrial materials and often serve as bellwethers for the direction of consumer prices – are also rallying. So is gold, which has historically served as a store of value in times when inflation has been a concern. ”

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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