Well, the link shows the nominal yield on a nominal government bond maturing in 2022 at 3.22%. If you believe that inflation will average 2.0% over the next ten years, that's a real return of 1.22% -- and you bear the risk of unexpected inflation. If you believe that inflation will average 3.0% over the next ten years, that's a real return of 0.22% -- and you still bear the risk of unexpected inflation higher than 3.0%.big easy wrote:A week and a half later and now it's 0.48% on the 2021. Is that a misprint?
http://www.globeinvestor.com/servlet/Pa ... ype=fedgov
I would say that the prices of nominal government bonds and real return bonds are reasonably well aligned. Both give very low real returns. There are a lot of theories out there as to why this is so. But it is so, it's not going away soon, and investors have to deal with it.
If you want higher real returns, you have to move up to corporate bonds or equities, as James Hymas has said upthread. I think that adds risk (but others may disagree). What you do depends on your tolerance for extra risk. Mine is lower than it used to be.
George