TIPS yields plunged to new record lows today.  The 5 year closed at -1.14% real return and the 10 year closed at -0.24%.  Just think, with virtually no risk you can lose 0.24% real for a full ten years.

Today’s records were set due to a small uptick in inflation expectations, not decreases in Treasury yields.   In an effort to stimulate the economy US policy makers continue to operate fixed income markets at an historic low yield point.  If the theory is that low cost money will stimulate borrowing and hence economic expansion, the evidence of the last few years is, IMO, weak.  If the theory is that low yields will make equities look more attractive leading to higher equity markets this seems to have happened post 2008 crash.   Does this cause me to change my key FI/Equity allocation? No.