“There is a very interesting note at soberlook.com about TIPS and inflation expectations. Would appreciate your comments on this. Also could we get the 1yr and 2yr TIPS and US Bond rates into the chart library. The library already has the 5, 10 and 30 year rates. It would be nice to be able to look at the entire treasury and TIPS curve. Thank you”

Eoin Treacy's view Thank you for these suggestions for the Chart Library. We already have charts for 2yr, 5yr, 10yr and 30yr generic TIPS yields. There is no generic 1yr TIPS yield data point in Bloomberg so I'm afraid I cannot add it. In order to show the TIPS curve I have added the spread between the 10yr and the 2yr. I have also added the 12-month Treasury yield to the Chart Library.

The 2yr TIPS yield has rallied impressively since Mid-March as investors priced in the deflationary threat posed by the Eurozone's crisis on the global economy. The yield is overbought in the short-term but a clear downward dynamic will be required to check momentum beyond a brief pause.

The TIPS yield curve has become mildly inverted reflecting short-term deflationary expectations. Here is a Bloomberg chart reflecting the flattening of the curve over the last few months. The Treasury yield curve remains firmly in positive territory.

There has been a great deal of loose talk about the potential for a US recession to complement the contraction evident in Europe. While Ben Bernanke today demurred from outlining fresh stimulus measures, no one really believes the Fed is willing to standby if the USA's hard fought for modest growth rate were to come under threat. Therefore as the Eurozone's crisis becomes more intimidating, the chances of additional support measures are increasing.