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.
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.