What's a bond with a negative yield?

since real interest rates are negative, a bond which pays based on the cpi should have a negative rate

tips bonds are the invention of the rubin treasury

real rates at less than zero are the work of our fine federal reserve

how does it feel to live in japan?

Not entirely accurate, its traders betting on specific aspects of QE2.

what are you talking about?
the specs of the bonds are very specific--they pay a rate determined at auction, as in the 5yr today which came at negative 55 basis pts, and in the secondary markets, in additon to an amount based on the cpi--for a number of reasons tips have been bid up to account for anticipated ongoing negative real interest rates--the fed has indicated that, via qe2 and generally obscenely easy monetary policy, it will be targeting reflation of our economy

current 5yr treasury yields a lousy 1.18% where the fed hopes to reflate to appx 2% CPI

I'm feeling japanesa, I'm feeling japanesa, I think so.

Jason shouldn't you be streaking naked across the I bank trading floor to male friends? Leave the negative discussion to us fruitcake makers.

'make' damn iPhone!

Some day you will understand interest rate futures, swaps, and swaptions. Obviously people expect a positive yield in the future.

This is a big story, it means the market is convinced the Fed is engaged in an inflationary policy that they'll accept zero real rate of return(ignoring any questions about the CPI itself). Think about it, investors are saying I want a less than zero real rate of return.

How many people would lend money out and only want 99% of it back?

jason, r u saying that mkt participants in interest rates and their desire to lock in or take on interest/inflation rate risk is the core determinant of the negative TIPS yield and is in no way reflective of riversider's opinion his bagel prices have risen? Do tell.....

And from another vantage point, we've told purchasers of our national debt that if you park in dollars, those dollars will buy less in the future. Forget foreigners, are Americans so brain dead to realize they are being subject to a hidden tax when their savings are losing purchasing power due to Fed action?

fking idiot. it took a negative yield to tell you that? how about 10bps on savings acct? NO it was only when TIPS went negative... you can't be more financially imbecilic....

"Some day you will understand interest rate futures, swaps, and swaptions. Obviously people expect a positive yield in the future."

happy to field any intelligible inquiry re the above instruments--as phrased, no clue wtf you are talking about

http://www.alanhart.net/

At last somebody has said it in the most explicit way possible. The somebody also said: “The problem is Zionism and the solution is dismantling the Zionist framework and instituting a secular democracy that does not discriminate between Israelis and Palestinians.”

WIth QE2 expect to see more negative bond yeilds is whats I means.

only downside is if inflation doesnt pan out, then you just paid the government to lend them money

And if you're so so sure that inflation lies ahead, wouldn't you do better just laddering more conventional products and avoid the downside risk of negative yield for longer than you'd like. Plus TIPs use the govt's handy-dandy bogus 50% of real inflation mechanism to up yield.

No?

Laddering into products that all under-price inflation?

PIMCO had it right, sell CPI floors.

how do i short riversiders?

Excellent question. Thanks as always for adding to the streeteasy discourse.

here: http://tinyurl.com/29qcfu7