Bond Traders' Inflation Bets May Ignore Growth Risk From Tariffs
- Investors buy biggest TIPS ETF at fastest clip since February
- Pimco’s Banet says inflation could pick up as economy slows
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Investors who are piling into U.S. inflation-linked debt as a hedge against overheating growth and trade disputes may be taking on more risk than they realize.
The biggest exchange-traded fund that focuses on Treasury Inflation Protected Securities just saw its largest two-week inflow since February amid escalating oil prices and tariff threats. Meanwhile, some market measures of near-term inflation have risen: Swaps are pricing in core consumer-price inflation of around 2.8 percent in 2020, according to Bloomberg calculations. Core CPI hasn’t been that high since 2006, and June’s figure, to be released Thursday, is expected to be 2.3 percent.