Morgan Stanley proposes to take a long position on US treasury bond bonds, betting that they will outperform inflation protected bonds

On January 28, Morgan Stanley strategists advised customers to short 10-year inflation protected treasury bond bonds (TIPS) and buy 10-year U.S. treasury bond, hoping to profit from the possible reversal of inflation cooling and profit loss ratio. Strategists such as Aryaman Singh suggest betting that the 10-year breakeven inflation rate will drop from around 2.4% to 2.15%, with a stop loss target set at 2.5%. As inflation cools, they expect the yield of treasury bond to decline faster than the TIPS yield.