BlackRock joins Pimco and asks protection against inflation

BlackRock: BlackRock Inflation Protected Bond portfolio lost 1.5 percent in the last 12 months


BlackRock joined Pacific Investment Management to recommend the purchase of securities linked to inflation, warning that US prices are bound to rise.

"The stabilization of oil prices and a tighter labor market may contribute to the increase in current and expected inflation in the US," wrote Richard Turnill, chief strategist of global investment in BlackRock, on the institution's website on Monday. "We like bonus pegged to inflation and gold as a diversifying." BlackRock is headquartered in New York and manages $ 4.6 trillion.

The chairman of the Federal Reserve, Janet Yellen, have the opportunity to explain his views in a speech on Tuesday, from 24:20 in New York.A Pimco, which manages the fund total return of US $ 87.8 billion, and BlackRock, warned investors this year that inflation is accelerating.

Representatives of the Fed Stanley Fischer and James Bullard said this month that costs are rising, feeding speculation that the US central bank is closer to raising interest rates.

The Treasury bond yield to maturity of 10 years fell 0.04 percentage point to 1.85 percent at 8:58 in New York, according to Bloomberg Bond Trader data. The paper with 1.625 percent yield and maturing in February 2026 advanced 11/32, or $ 3.44 per title with a face value of $ 1,000 to 98.

The Treasury plans to sell on Tuesday $ 34 billion in notes maturing in five years, which yielded 1.36 percent in pre-auction trading.

Losses on portfolios

BlackRock Inflation Protected Bond portfolio lost 1.5 percent in the last 12 months, while the Total Return fund, Pimco, lost 1.8 percent, according to data compiled by Bloomberg. The two funds had a worse performance than more than 60 percent of their peers.

"Looking at the inflation expectations reflected in the bond market, we think that are too low," said Joachim Fels, global economic advisor at Pimco, in an interview with Francine Lacqua in "Surveillance" program, Bloomberg Television. "We still think that the prices of markets feature a very low profile for inflation. We do not think inflation will be significantly above target, but we think there are good chances for the next 12 months or so, especially in the US, the indices back to 2 percent. "

The prospect of inflation embedded market in Treasury bonds and oil prices advanced in relation to the minimum levels of the year reached in February. According to the Bloomberg survey of economists, they were created 210,000 jobs in the US in March, after the opening of 242,000 jobs in February. The US government report will be released on April 1.

inflation outlook

The difference in yields between Treasury bonds and 10-year bonds of the protected institution of inflation and similar term - a measure of the expectations of traders for consumer prices - rose to 1.55 percentage point, to 1.12 in February 11.

The difference is even lower than the 2.08 average observed in the last decade.

The preferred inflation indicator of the Fed rose 1 percent in the 12 months through February, according to a report published on Monday. The variation is half the target of the central bank, 2 percent.


--With Collaboration Anooja Debnath and Lucy Meakin.