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Engineering Inflation: For the Fed, the Time Is Now
by Jeremie Banet of PIMCO, 12/4/18

As the Federal Reserve embarks on a review of its long-run monetary framework, questions about its inflation target are resurfacing. We believe now is the time for change.

Breakeven Inflation Rates: What’s Beyond the Post‑Election Bump?
by Tiffany Wilding, Jeremie Banet of PIMCO, 11/29/16

Trump’s fiscal and immigration policies appear likely to boost the near-term inflation trajectory.

March CPI Report: Valuations Matter
by Jeremie Banet of PIMCO, 4/18/16
The March report on the U.S. Consumer Price Index didn’t paint the rosy picture some were expecting. Headline CPI year-over-year was 0.9% versus the expected 1% and core CPI ticked lower to 2.2% for the 12 months ended March, down from 2.3% in February. Despite this March surprise, we believe Treasury Inflation-Protected Securities (TIPS) can weather much more before they underperform nominal Treasuries.

How Much Slack Is in the U.S. Economy? The Inflation Jury Should Decide
by Jeremie Banet of PIMCO, 3/10/14
The unemployment rate may not be a reliable indicator of output slack in the U.S. economy. We?ll know (with a lag) if the economy has reached the end of the cyclical downturn when inflation picks up. The Fed will have to choose between risking a hawkish mistake or being behind the curve, waiting to see inflation actually increase. We expect it will choose the latter.

Promise to Be Irresponsible
by Jeremie Banet, Mihir Worah of PIMCO, 6/18/13
We believe the recent rise in real rates and fall in inflation expectations could jeopardize the U.S. economic recovery. We also believe these are a direct result of uncertainty about the Federal Reserves ultimate goal. Low real yields accompanied by sufficient nominal growth are the necessary prescription for a still ailing economy.

The New TIPping Point
by Jeremie Banet, Rahul Seksaria, Mihir Worah of PIMCO, 10/11/12
The Federal Reserve's QE3 program combined with more aggressive communication are likely to have implications for Treasury Inflation Protected Securities (TIPS).

TIPS for Value Investors: Whos Afraid of Negative Yields?
by Jeremie Banet and Mihir Worah of PIMCO, 4/27/12
Why wasnt the recent TIPS auction a blockbuster among Main Street investors? We believe they were frightened away by the -1.08% real yield. We would argue that the negative real yields that are explicit in TIPS also represent the implicit discount rate for ALL financial assets in the U.S. Moving away from TIPS into nominal yield is a bet on inflation being less than 2% for the next five years and less than 2.25% for the next 10 years a pretty bold bet!

The Mess That Is the Eurozone Inflation-Linked Bond Market
by Michael Althof and Jeremie Banet of PIMCO, 1/17/12
Italian ILBs now mostly reflect credit risk and tend to trade at a discount to compensate for the higher volatility. Unless the eurozone collectively decides to inflate their way out of their sovereign debt problems through a large increase in the ECB balance sheet, Italian inflation-linked bonds are likely to keep trading like a more volatile and less liquid version of nominal Italian bonds. A European investor looking to secure consumption of real assets in the future may wish to think about alternative measures to help protect their real purchasing power when hedging real liabilities.
8 results found.