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Am I wrong to conclude these charts suggest a future of low inflation (Tips) with economic growth (TLT)? And at worse deflation?
Deflation is our thesis. TIP has unperformed TLT for some time. For TIP to look better than treasuries shows some inflationary thinking. However, the long term trend TIP vs. treasuries is in decline and likely to remain so. We see the indication of some pick-up in economic activity from a short-term restocking cycle which we wrote about in December.
We have an update on our deflation thesis you may be interested in…