HALISTER1: 5y5y TIPS Breakevens Still About 16bp Too Cheap, TD Says

5y5y TIPS Breakevens Still About 16bp Too Cheap, TD Says

(Bloomberg) -- Model incorporates oil, short rates and stocks, and “has done a reasonably good job at predicting 5y5y BEs since tapering began in early 2014,” TD strategists led by Priya Misra say in March 18 note.
  • Other positive factors include improving CPI fundamentals, Fed concern about survey-based inflation expectations and reduced TIPS supply
  • Recommended trades include long 10Y breakeven (target 1.8%, stop at 1.3%) and 5s30s BE curve steepener, based on expectation inflation risk premium will rise (target 35bp, stop at 18bp)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Priya Misra (TD Securities USA LLC)

To de-activate this alert, click here

UUID: 7947283