Inflation-indexed securities

Inflation-indexed securities

Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
Another way to see what the Fed's zero interest-rate policy (ZIRP) is doing to people who rely on interest earnings for their income is to examine the yield on Treasury inflation-indexed securities.
inflation-indexed securities issued by the government.
In recent years, inflation-indexed securities have become popular for use in portfolios.
The later-morning peak in activity in the indexed market may reflect differences in use and ownership between nominal and inflation-indexed securities.
Inflation-indexed securities and annuities, among other products, that are now available only in developed markets, may eventually be introduced in the country.
This article reviews the experiences of a few countries that have issued inflation-indexed securities and draws some common lessons about promoting market liquidity.
The only market-based measure of inflation expectations is the spread between Treasury inflation-indexed securities (TIIS) and the corresponding non-indexed Treasury issue.
Another unique group of securities issued by the United States Treasury are Treasury Inflation-Indexed Securities, often called Treasury Inflation-Protected Securities, or TIPS.
The premium they calculated was 50 to 100 basis points, which led them to their prediction that inflation-indexed securities would overstate expected inflation by that much.
Today, the popularity of Treasury Inflation-Indexed Securities (TIIS) is on the rise due to the increased demand for fixed-income securities by investors, the increased supply of TIIS, and the increased possibility of higher fluctuation of price levels.
Treasury began issuing inflation-indexed securities in early 1997.
The other shows that the implied real return on Treasury inflation-indexed securities has fallen over the past few years even though projected budget deficits have increased.