I was reading this post from Kevin Muir and decided to look closer at the charts for the inflation expectations gauges, TIP/TLT and TIP/IEF. Below are weekly charts. They roughly mimic the Fed’s Breakeven Inflation rates, like the 10yr…
The TIP/IEF view (TIPs vs. 7-10yr bond) looks especially interesting.
Now, I would not go buying a chart pattern (bullish though it is) on a ratio but what I would do is tell you that if you are in the ‘rising inflation’ camp looking forward, this gauge has been rising since gold and silver kicked off the ‘inflation trade’ in January of 2016 and would be likely to continue doing so if we are entering an era of chronic inflation problems (i.e. the chickens that would come home to roost after all that off the charts central bank policy designed to raise asset prices).
TIP/TLT has been a laggard, as inflation concerns have been clustered nearer the shorter end of the curve. But it too has been rising since 2016, at a lag of a few months to TIP/IEF.
I decided to pull a chart of RINF, the ‘inflation expectations’ tracker from ProShares and it seems to fairly well represent a combination of the two (but is closer to the 30yr, which is its mission per the graphic below). It’s been rising since 2016 as well.
RINF can be explored fully here: RINF Inflation Expectations ETF
Buying RINF would not be like buying bonds or even Inflation protected bonds. It would be like buying bond market dynamics that indicate inflation. Big difference.
Here is a screenshot of the overview…