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….