On this page we examine the history of the relationship between long term and short term government debt yields in the United States. We’re especially interested in when the yield curve inverts – or short term borrowing costs exceed longer term costs. In a recent inflation article, we examined the yield curve measured by the […]
One series that DQYDJ likes to follow quite often is the market’s current stance towards expected inflation over the next 5-30 years. It’s an easy calculation to make – you subtract the real, inflation adjusted yield from non-inflation adjusted yields – the missing factor is ‘CPI‘, or what CPI the market expects over the next […]
This is a series we revisit pretty often because… well, it’s so interesting. As we’ve pointed out in the past, you can get pretty-much-realtime estimates about the market’s inflation expectations by subtracting the yield on inflation adjusted instruments from the yields on treasuries. That, of course, leaves you with ‘expected CPI’, which is one of […]
One of the interesting things you can do with Treasury yield data is get a feel for what the markets expects to see in terms of inflation over the next thirty years or so. By subtracting real (read: after inflation) yields on inflation protected securities from the yield on non inflation protected securities, you can […]
When we published our real expected return research on BBB and AAA corporates (as rated by Moody’s) and Treasuries, we knew we’d leave readers a bit wanting. Although we had wanted to take that piece further, we were limited by the data available to us and our sad lack of a research assistant (if you’re […]
If you recall, in our last article we calculated historical risk spreads between various asset classes. Not content to leave that topic in an unfinished state, here’s the results of some further calculations – this time looking at debt vis-a-vis itself – we compare last week’s asset classes to inflation expectations at the time… (Oh, […]
The Treasury Return Calculator below uses long run 10-year Treasury Data from Robert Shiller to compute returns based on reinvesting the coupon payments. You can see the total returns for the 10 Year Treasury for any arbitrary period from 1871 until today. (If you are looking for a similar calculator for the S&P 500 with […]
One important thing to have an idea of – for personal and business reasons – is the amount of inflation expected in the future. Think about it – by having a reasonable number to plan for the erosion of the value of your money, you will better be able to make decisions on what loans to take out, what purchases to make, and how to invest.
Luckily for you, there are a few ways to gauge these predictions, which don’t resort to guessing, praying, or going to a fortune teller. The methods are also more sophisticated than taking the last few years worth of data, drawing a trend line, and attempting to extrapolate future results.
How did you react to the stock market’s (defined, in my mind, as the S&P 500 index) recent precipitous drop? If you’re like many investors, you moved out of ‘risky’ assets such as stocks and into ‘safe’ assets such as money market funds and stable value funds. Unfortunately, the seeming safety of fixed income investments is a mirage… hidden forces, such as the danger of inflation, make ‘safe’ investments less safe than first glance. Paradoxically, the recent movement to safer portfolios has put many people at risk for a reduction in the real value of their money in inflation adjusted dollars.