Danger! Danger, Will Robinson…Force field in motion. The force of the TIPS market is still up, but it can’t hold forever. Actually the diagonal triangle has to resolve by late 2013, where the trend lines cross. That’s a long time. But, I’d be wary of alien beings that would want to take it down before then. How over-valued is this market? If you were to accumulate all the CPI adjustments since the bottom in 2008 (blue circle on the chart), the yellow line represents full and fair market adjustment. Anybody buying these at higher prices than that are gonna feel the pain. If I owned them, I’d be a seller in a big and hurried way.
I only see one thing that will bring down this house of cards. That is another down grade of the U.S. Treasury debt. Anything else would just bid these up more. So I suspect the next down grade is in our near future. These will probably break the lower trend line before they announce it, because the government insiders will already be selling by then.
Here’s the url for the CPI numbers from the BLS, of which I referred. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt