Need simple breakdown of TIPS yield & beginners bond book

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Tyr0ne
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Joined: Thu May 10, 2012 1:35 pm

Need simple breakdown of TIPS yield & beginners bond book

Post by Tyr0ne » Wed Oct 17, 2012 12:45 pm

I apologize for my very limited understanding on the subject, I searched for TIPS on the forum and pretty much all of the discussions are beyond the scope of my understanding. I've read the TIPS section in the wiki, and most of it makes sense, but it doesn't get very detailed. The historical yields for TIPS sure threw me for a loop though.

Year Barclays US Treasury Inflation Protected Index
2011 13.56%
2010 6.31%
2009 11.41%
2008 -2.35%
2007 11.63%
2006 0.41%
2005 2.84%
2004 8.46%
2003 2.60%
2002 16.57%
2001 7.89%

I have a million questions about TIPS, but I guess if I could ask one question it would be where does all the volatility in TIPS yield come from? Are interest rates and inflation all that factor in to the yield, or is there more?

Also, I was hoping I could get a recommendation for a good book on bonds for beginners. I'm getting a good handle on asset allocation and other big picture topics, I'm hoping to start understanding the nitty gritty of bonds and the several types of "yields" always discussed on the forum. The Bond Book by Annette Thau sounds like it may be a little over my head.

As always, thanks to everyone for any and all advice you can throw my way
There are times when, at least for now, one must be content to love the questions themselves - Neil deGrasse Tyson

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Barry Barnitz
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Re: Need simple breakdown of TIPS yield & beginners bond boo

Post by Barry Barnitz » Wed Oct 17, 2012 12:50 pm

tycoryj wrote:I apologize for my very limited understanding on the subject, I searched for TIPS on the forum and pretty much all of the discussions are beyond the scope of my understanding. I've read the TIPS section in the wiki, and most of it makes sense, but it doesn't get very detailed. The historical yields for TIPS sure threw me for a loop though.

Year Barclays US Treasury Inflation Protected Index
2011 13.56%
2010 6.31%
2009 11.41%
2008 -2.35%
2007 11.63%
2006 0.41%
2005 2.84%
2004 8.46%
2003 2.60%
2002 16.57%
2001 7.89%

I have a million questions about TIPS, but I guess if I could ask one question it would be where does all the volatility in TIPS yield come from? Are interest rates and inflation all that factor in to the yield, or is there more?

Also, I was hoping I could get a recommendation for a good book on bonds for beginners. I'm getting a good handle on asset allocation and other big picture topics, I'm hoping to start understanding the nitty gritty of bonds and the several types of "yields" always discussed on the forum. The Bond Book by Annette Thau sounds like it may be a little over my head.

As always, thanks to everyone for any and all advice you can throw my way
Hi tycoryj:

Please not that the index return figures in the table are not yield numbers, but rather total returns (yield plus capital change) returns for each calendar year.

regards,
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Tyr0ne
Posts: 64
Joined: Thu May 10, 2012 1:35 pm

Re: Need simple breakdown of TIPS yield & beginners bond boo

Post by Tyr0ne » Wed Oct 17, 2012 12:58 pm

Barry Barnitz wrote: Hi tycoryj:

Please not that the index return figures in the table are not yield numbers, but rather total returns (yield plus capital change) returns for each calendar year.

regards,
Thank you for pointing out this blatant point :oops: . That makes much more sense
There are times when, at least for now, one must be content to love the questions themselves - Neil deGrasse Tyson

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