US 10-year TIPS turned positive yesterday for the first time since the first quarter of 2020. Given that these are inflation protected, this move is significant because it suggests that the real component of the 10-Yr nominal yield is higher than the inflation component. This return makes bonds more desirable for income investors and may impact the risk markets. Besides the psychological boon, it is likely to add pressure to growth assets due to a higher discounting factor. Now that TIPS looks to be clearing zero, it will be interesting to see if stocks, particularly growth stocks, become more sensitive to higher yields.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.