Are Investors Prepared for What may Be on the Horizon?

Demand for protection against rising costs is showing up in the S&P Global Developed Sovereign Inflation-Linked Bond Index, with the yield tumbling to -0.65%, the lowest level since April 2013.  The index has returned 1.09% MTD and 2.70% YTD, as of March 31, 2015.

Janet Yellen has been quoted saying “oil is having a transitory negative effect on inflation,” and she is taking “comfort” in the longer-term inflation expectations.  Reading between the lines, once oil normalizes, a higher inflation level (headed toward the Fed’s inflation target) is to be expected.
S&P Global Developed Sovereign Inflation-Linked Bond Index

Source: S&P Dow Jones Indices LLC.  Data as of March 31, 2015.  Charts and tables are provided for illustrative purposes only.  Past performance is no guarantee of future results.

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