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iShares TIPS Bond Message Board

  • carsnmoney00 carsnmoney00 Mar 6, 2012 1:49 PM Flag

    Question for really Knowledgable People

    The Fed has listed their outlook on when they will start increasing interest rates...

    Given that bond prices move opposite of yields, is the fed's interest rate outlook a gift?

    What I mean is...if you know that the fed will raise rates by a certain percent at a certain time and you know that an increase of rates will decrease the bond price....isn't this just a great money making opportunity?

    You can short bonds as the time gets nearer knowing that it will go down because the rate will go up.

    Am I wrong?

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    • The Fed has listed their outlook on when they will start increasing interest rates...<<

      For all but very short term rates, they follow the market, but try to give the appearance of controlling the market. The only time they really control it is when they monetize the debt (buy it all) as in major wars or they guarantee that rates will not rise above a certain percentage rate like they did between the end of WW2 and the early 1950s.

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