The situation has become so difficult in markets that investors are now willing to store away money for a full five years without receiving any return, according to this TIPS chart from Felix Salmon (via Crossing Wall Street).
Salmon is uncertain why TIPS have gotten to this point. He doesn’t think its because markets really believe GDP growth will be zero for the next five years, but he does feel that it is a “desperate lunge to safety.”
That makes sense to us. Some investors may be buying into the belief that deflation now will lead to serious inflation problems in the future.
The chart shows the Treasury Inflation-Projected Securities, with the 5-year trading at or around 0.0% return (in blue).
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