2013 is set to be the first year since the creation of the index in 1997 that TIPS prices will close lower for the year as November's inflation number was the lowest monthly reading in the U.S. since 2009.
TIPS stand for Treasury Inflation Protected Securities. They are securities indexed to inflation and are used by investors as protection against higher inflation.
With expectations for inflation to remain low and the prospect of the Federal Reserve reducing its bond purchases, the question of when will inflation return to more normal levels is coming back.
The first step toward increased inflation readings is for prices to actually rise, not just for expectations to improve. Previously, since the inception of quantitative easing, inflation expectations had been rising steadily.At the beginning of 2013, however, those expectations became less credible. Central banks across the globe had embarked on unprecedented stimulus measures, and yet prices didn't move meaningfully higher.
Follow @macroinsights This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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