John At The Center

In a deflationary world, standard 10-year Treasurys will outperform TIPS because their coupon payment — the semiannual interest payment — is higher at 3.5% vs. 1.625% for TIPS, meaning Treasury buyers receive a bigger income stream at a time when that stream buys increasing amounts of goods and services.

But held to maturity, the bonds offer nearly identical yields.

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