Guest Commentary: The Bond Market’s Crystal Ball

[Charles]

We know that the bond market is expecting modest inflation for the next few years by looking at the rates of regular, or ‘nominal,’ U.S. Treasury Bonds compared to the rate of Treasury Inflation Protected Securities (TIPs). By comparing the nominal yields on Treasury bonds with the real return on TIPs, we can assess the bond market’s assumption about inflation since, in theory, the nominal yield on Treasury bonds minus expected inflation should equal the real yield on TIPs.


More... (http://www.dailyfx.com/forex/fundamental/article/guest_commentary/2011/04/11/Guest_Commentary_The_Bond_Markets_Crystal_Ball.htm l)