I bought a bunch of TIPS in 2002 and it’s doing quite well for the time being. During the current financial meltdown, the Treasury bond seems the only one which was not shorted. I believe as Fed continues to print money, there’ll be a good chance T-bond might be heavily shorted someday… Will it happen? If it does, what will be the impact to TIPS - will I lose all interests earned from the past? I know at least I’d keep the principal in worst scenario.
Tons and tons and tons of T-bonds are shorted all the time. What are you asking?
Yes, of course they are shorted all the time. However, the bond price is held pretty steady compared with the heads-off stocks. The raise of the debt-ceiling of over $800B from the bail-out bill will be a huge increase in money-supply. Wouldn’t it signal upcoming inflation forcing the bond values down?