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THE BOND TRADE OF THE YEAR

In my 2009 Investment Predictions I said that TIPs would substantially outperform treasuries.    If you ran a bond desk and had this simple long TIPs/short Treasuries trade on your year is over and you are drinking copious amounts of champagne on a beach in the South Pacific while the rest of the world spirals into the burning depths of hell.

Treasuries are down roughly -13% YTD vs the 2% return on TIPs.  A 60% annualized return in the bond market.  Not bad.

TIPs, apparently, aren’t just for waiters….

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