Matt Grossman

speaker

182 appearances 3 recordings 1 series first heard Apr 2022 last heard Jan 2025

Matt Grossman’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Why Unemployed Office Workers Are Struggling to Find New Jobs · 10 Jan 2025 podcast

2025 is going to be very interesting on that front.

So the Federal Reserve, which had been completely focused on trying to curtail inflation for most of the last two years, now has started to pay more attention to getting the labor market into better shape or at least preventing it from getting any worse.

And so they've started cutting interest rates last year.

They've now cut interest rates by about a percentage point.

And most economists expect they'll continue to be at least a couple more interest rate cuts this year.

Of course, that makes it a bit easier and less expensive to borrow money for companies that could encourage more companies to expand.

But

With inflation still above where the Fed wants it to be, the central bank really has to balance those two sides of the economy well, and they don't have unlimited scope to keep supporting the labor market.

WSJ Your Money Briefing · Why Inflation-Protected Bonds Aren’t Keeping Up With Inflation · 10 Oct 2022 podcast

So if inflation raises prices by 2% in a certain year, then the government will revise up how much it owes you by 2%.

And that will be reflected in higher interest payments for you and also a higher principal or the full amount that you get back when the bond matures.

Thanks for having me.

Sure.

So treasury inflation-protected securities, also called TIPS, work pretty similar to run-of-the-mill normal treasury bonds.

So TIPS are sold by the government, and they mature in either 5, 10, or 30 years.

And just like regular treasury bonds,

They pay interest twice a year at a fixed interest rate that gets locked in when you buy the bond.

And the difference is that unlike a treasury bond, TIPS will actually help a bit to protect you against any inflation that happens while you own the bond.

With a normal bond, there's any inflation between the time you buy it and the time it matures, that's going to eat into the interest and the returns that you get from owning the bond.

TIPS have some features to try to protect you from the pain that the inflation could cause you.

So when you buy a TIPS, you're basically lending the government money for five years or 10 years or however long the bond is outstanding.

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