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The U.S. Department of Transportation said Thursday that traffic fatalities in 2009 reached their lowest level since 1954.

Highway fatalities totaled 33,963 nationwide last year, according to the DOT, a drop of 8.9% from 2008, when deaths on the road totaled 37,261.

The government also said that the fatality rate in 2009 declined to 1.16 fatalities per 100 million miles traveled — the lowest rate ever. This is down from a rate of 1.25 fatalities the prior year.

The DOT also said that fatalities have been in decline for 15 consecutive quarters, through the end of 2009.

Traffic deaths reached a "near-term" peak in 2005, then plunged 22% through 2009, the government said.

The National Highway Traffic Safety Administration attributed the decline in deaths to its campaigns for increased use of seatbelts and against drunk driving, as well as safer roads and safer vehicles. 

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European Union finance ministers are uniting to oppose President Barack Obama’s proposal to limit banks’ size and risk-taking, saying his plan may run counter to EU policy, according to a draft document.

Their position, which they will ratify at a two-day meeting starting today, comes after Obama last month urged the adoption of the so-called “Volcker rule,” named for former Federal Reserve Chairman Paul Volcker. The plan would bar commercial banks from owning hedge funds and limit how much they can trade for their own account.

The finance officials gathering in Brussels will express “their concern that the application of the ‘Volcker’ rule in the EU may not be consistent with the current principles of the internal market and universal banking,” the document obtained by Bloomberg News said. “Any policy choice should avoid pushing risks to other parts of the financial system.”

The resistance underscores political divisions over how to overhaul banking regulations to prevent a repeat of the crisis that forced taxpayers to prop up the financial system. While leaders have called for a Group of 20 initiative, the U.S., Britain, and France are forging their own policies to limit compensation and risks.

At a meeting this month in Canada, Group of Seven finance ministers signaled they are rallying around a plan to introduce a levy on banks if it can be applied worldwide business cards design.

The Feb. 10 draft, entitled “Issues note on the most recent proposals of the U.S. administration in respect of Systemically Important Financial Institutions and the introduction of a financial crisis responsibility fee,” was prepared by a committee of officials from finance ministries, the European Central Bank and the European Commission.

EU Proposals

The three-page memo also considered proposals including levying a stability fee on banks and creating national or pan- European funds for future bailouts.

Swedish Finance Minister Anders Borg last month presented a plan to create a fund for future banking crises. In contrast, the Netherlands’ Wouter Bos last month wrote a letter to his counterparts welcoming Obama’s proposals and calling for a “serious debate” on the U.S. plan at the meeting in Brussels.

Jean-Claude Juncker, who heads the group of euro-area finance ministers, last month voiced concern about a common approach on bank levies given that taxes are a matter dealt with at the national level of the 27-member bloc.

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Knight Security Systems has won a contract with the Texas Department of Aging and Disability Services to install security cameras at the San Antonio State Supported Living Center.

This is a home that cares for 300 mentally disabled people in San Antonio. The video cameras should help ensure residents are being kept safe.

The work is being done in San Antonio as part of a statewide contract between Aging and Disability Services and Houston-based Knight. In all, a total of 12 state-supported living centers will receive the company’s cameras.

The contract is worth $12 million.

Knight will install a total of 3,200 video cameras in 335 buildings.

Founded in 1983, Knight Security Systems has worked with more than 3,000 Texas customers since its inception.

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Finance Minister Hirohisa Fujii’s health deterioration threatens his four-month tenure, exposing a lack of experience in a government that’s struggling to contain Japan’s debt and sustain an economic recovery.

Prime Minister Yukio Hatoyama said yesterday that no decision has been made on whether Fujii, 77, will remain in his job as the government awaits judgment on his medical condition. Fujii told reporters in Tokyo that health issues may prevent him from attending the next session of parliament this month. He is likely to resign, Kyodo News reported today, citing an unnamed ruling party lawmaker.

A Fujii resignation would elevate focus on the two vice- finance chiefs, Yoshihiko Noda and Naoki Minezaki, as well as Deputy Prime Minister Naoto Kan, who heads economic policy, and Yoshito Sengoku, the minister for administrative reform. Investors would examine any successor’s credentials on fiscal matters after Fujii championed avoiding an increase in new bond sales, said Susumu Kato at Calyon Securities in Tokyo

“Hatoyama needs someone who is heavyweight and has expertise, but the DPJ lacks experienced personnel,” said Kato, Calyon’s chief economist for Japan. “Fujii gave a sense of security in a relatively young Cabinet as he’s veteran politician who has already been finance minister.”

Retirement Postponed

Hatoyama asked Fujii last year to postpone retirement and run in the August election that brought his Democratic Party of Japan to power for the first time. Fujii previously headed the Finance Ministry in 1993, and is a former budget examiner at the agency, giving him a deeper background in the area than other lawmakers in the party.

Financial markets indicated little immediate concern over doubts about Fujii’s future, with Japanese government bonds little changed and the Nikkei 225 Stock Average closing at the highest level since October 2008. Yields on benchmark 10-year notes were at 1.325 percent. The yen rose 0.6 percent to 91.92 as of 6 p.m. in Tokyo yesterday.

The Diet is scheduled to convene later this month, when the finance minister would typically face lawmakers’ questions over the proposed record 92.3 trillion yen ($1 trillion) budget.

While the DPJ-led coalition’s majority in the Diet means Hatoyama’s 2010 budget is likely to be little affected by a Fujii departure, it could complicate any effort to compile an additional fiscal stimulus, said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.

Stimulus Weighed

“There’s a chance that the government may have an additional stimulus” package to submit before elections for the upper house of the Diet in July, Muto said. “If that happens, the government will be in trouble unless it chooses a person who has strong political leadership as a next finance minister.”

The latest warning on the durability of Japan’s recovery from its deepest postwar recession came yesterday from Sony Corp business card templates. Vice Chairman Ryoji Chubachi. He said “there’s a risk of a double-dip recession,” citing the damage of deflation to companies’ earnings. Chubachi spoke at a New Year’s party attended by government officials and business leaders in Tokyo.

Kato at Calyon Securities said a Fujii departure may have an impact on debt markets, depending on the dedication of any successor to avoiding an increase in government bond issuance.

Spending Restraint

In the course of compiling the 2010 budget, Fujii urged ministers to restrain outlays after their requests amounted to an unprecedented 95 trillion yen. He said the government must keep its promise of holding bond sales around 44 trillion yen to contain the world’s largest public debt burden — even after Hatoyama indicated he wouldn’t strictly adhere to the cap should more spending be necessary.

“There’s no finance-ministry type other than Fujii” within the DPJ, said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. “If Fujii steps down, fiscal discipline may loosen regardless of who takes over the post.”

Fujii, Japan’s fifth finance minister since August 2008, was admitted to hospital on Dec. 28 for high blood pressure and exhaustion, three days after the budget release. “My examination is continuing, and I’ll respect my doctor’s judgment,” he said. He canceled his regular Wednesday press briefing for today.

For Hatoyama, losing his finance chief would come as his public support tumbles. The Cabinet had an approval rating of 50 percent in a Dec. 25-27 poll by Nikkei Inc. and TV Tokyo Corp., down from 75 percent backing in mid-September.

Currency Stance

Some analysts said Fujii wouldn’t necessarily be missed by investors after he indicated he supported a stronger yen, only to later say that the government is prepared to step into the currency market to stem its gains. As finance minister, Fujii is responsible for overseeing Japan’s exchange-rate policy.

The yen climbed to a 14-year high of 84.83 per dollar on Nov. 27, hurting exporters by eroding their profits earned abroad. The currency has since retreated about 8 percent.

“Investor estimation of Fujii’s steadiness isn’t that high because of his currency gaffes,” Hirokata Kusaba, a senior economist at Mizuho Research Institute in Tokyo. “The budget has been already drafted and the government bill will pass because the ruling coalition controls both chambers,” meaning the impact of his departure “will be limited.”

Kusaba said Sengoku or Noda would be the most likely candidates to replace Fujii.

Kiuchi at Nomura said the yen may weaken no matter who succeeds Fujii because he “is labeled as tolerating a stronger yen and opposing intervention.”

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European industrial output fell for the first time in six months in October, led by a slump in demand for consumer goods. Employment declined in the third quarter.

Production in the economy of the 16 euro nations dropped 0.6 percent from September, when it gained 0.2 percent, the European Union’s statistics office in Luxembourg said today. Economists forecast a decline of 0.7 percent, the median of 30 estimates in a Bloomberg survey showed. Euro-region employment fell 0.5 percent in the third quarter from the previous three months, according to a separate report by the office.

The euro-region economy may struggle to gather strength after emerging from the worst recession in more than six decades in the third quarter as a stronger euro hurts exports just as rising unemployment erodes consumer spending. In Germany, Europe’s largest economy, investor confidence dropped in November.

“Today’s figures confirm the previous picture of an economy that is staggering, rather than bounding, back toward health,” said Colin Ellis, an economist at Daiwa Securities SMBC Europe Ltd. in London. “Further job losses are likely in the months ahead.”

European payrolls fell 2.1 percent in the third quarter from the year-earlier period, today’s data showed. October output dropped 11.1 percent from a year earlier after declining 12.8 percent in September.

Benchmark Bond

The euro fell against the dollar after the data and traded at $1.4648 at 10:35 a.m. in London, up 0.2 percent on the day, after reaching $1.4685 earlier. The yield on the German 10-year benchmark bond dropped 0.2 basis point to 3.18 percent.

European companies may keep spending plans on hold as the euro’s ascent makes their goods less competitive abroad. The single currency has gained 18 percent against the dollar since mid-February. Europe’s jobless rate has risen to 9.8 percent, the highest since December 1998.

“There are increasing signs that demand is weakening a little bit after an initial surge,” said Christoph Weil, an economist at Commerzbank AG in Frankfurt. “It’s a recovery with a foot on the brake one hour payday loan. Indicators will continue to point upward, but we’ll see a phase of disillusionment.”

European output of non-durable consumer goods dropped 1.6 percent in the month after rising 0.7 percent in September, today’s report showed. Production of durable consumer goods fell 1.4 percent, while energy output slipped 0.3 percent. Production of capital goods such as factory machinery was unchanged.

‘On Probation’

“I should like to warn against overly great optimism,” Martin Winterkorn, chief executive officer of Volkswagen AG, Europe’s largest carmaker, said earlier this month. “It would be premature now to call the end of the crisis. The recovery that’s emerging right now is a recovery on probation.”

The global economy is gathering strength after central banks cut interest rates to near zero and governments pledged $2 trillion in stimulus measures. The European Central Bank said on Dec. 3 it expects the euro region to expand about 0.8 percent in 2010 instead of a previously forecast 0.2 percent. In 2011, the economy may grow 1.2 percent, the bank said.

Daimler AG, the world’s second-largest maker of luxury cars, said on Dec. 7 that the Mercedes-Benz cars unit’s fourth- quarter sales will rise “significantly.” Alstom SA, which makes high-speed trains and energy-generation equipment, sees “some businesses doing better and they will eventually rebound,” CEO Patrick Kron said on Dec. 2.

Emergency Financing

ECB President Jean-Claude Trichet said on Dec. 3 that the bank will scale back its emergency financing operations next year after the economy emerged from the recession. The recovery will “likely be uneven,” he said that day.

“It’s very clear that there won’t be any easy and rapid recovery in the world economy,” ECB council member Erkki Liikanen told Bloomberg News in an interview on Dec. 11. The recovery is “slow and shaky.”

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Bernard Madoff’s investors aren’t the only ones suffering through the aftershocks of his epic fraud. A cloud of suspicion hangs over the financial planning industry, forcing even longtime veterans adjust their business practices and reassure skittish clients.

"In the wake of that scandal, people don’t know whom to trust," says Michael Garry, who runs his own wealth management firm in Newtown, Penn.

For Roger Balser, managing partner of Balser Wealth Management in Avon, Ohio, the Madoff mess unleashed an avalanche of new paperwork demands.

Soon after the scandal broke, Balser met with representatives from a firm that had referred customers to him in the past. The accountants — whom Balser had known for some time — grilled him for 90 minutes about how their clients’ assets were protected from him.

"I explained that the only things I can do are execute trades and take management fees from their accounts after notifying the custodian in writing," Balser says. "The CPAs were adamant that we cease this practice of having access to the client account to withdraw management fees."

Now Balser’s firm bills the clients every quarter and waits for a mailed check to pay the fees. It’s been a big hassle for the small company, sucking up extra administrative hours and expenses.

The Madoff fallout is worst near the fraud’s epicenter. "We serve a number of higher-end North Shore clientele and have felt the ripple effects of Bernie pooping in our sandbox," says Benjamin Chafitz, a partner with The Signature Group of Companies in Garden City, N.Y. He’s seen clients affected by Madoff losses move out of homes, cancel insurance policies and change their lifestyle.

"On the investment end, we are being quizzed like never before about who the custodians are and where the assets are invested," Chafitz says. "Across the board, clients are rethinking their relationship with their advisers. It is no longer adequate to be friends; you need to be able to demonstrate that you have the ideas, resources and staff to achieve your clients’ goals."

New skepticism

Spooked by Madoff’s crimes, some clients are seeking safety in brand names.

Garry met recently with a prospect referred by a longtime customer of his. After a phone conversation, they followed up with a two-hour consultation that Garry felt went very well. But the potential client chose instead to go with a financial planner from Morgan Stanley (MS, Fortune 500). Her reason: An accountant friend told her to avoid small firms in the wake of the Madoff scandal.

"Of course, I don’t think that is necessarily good advice because Madoff was hardly a tiny enterprise, and he was able to commit the fraud because he was an investment adviser and broker, just like the other large brokerage firms," Garry says. "The problem for me and others in my position is that if people aren’t sure who to trust, they tend to go with names that they have heard of, like the Merrill Lynches and Smith Barneys."

Customers are more skeptical than ever before, says Ron Reuven, CEO of Reuven Enterprises in New York City.

"It seems like just a year ago, these same people did not even know some of these loopholes existed, and now they question everything that comes to mind," he says.

When pitching for new business, he runs into a Catch-22: Clients don’t want to do business with an investment manager who isn’t the very best, and they’ll shop around to find the most successful advisers. But if you present a plan for generating above-average returns, clients are dubious — is it another Madoff-like scheme?

The blame for this new wariness doesn’t lie only with Madoff, Balser says. If industry regulators did a better job at reigning in bad operators, customers wouldn’t need to be so guarded.

"The SEC and the government have not done a good enough job when the warning signs were there," he says.

Damage control

It’s not all doom and gloom, says Paul Tran, president of Focal Point Financial & Insurance Services in Monrovia, Calif. He thinks the combination of the Madoff debacle and the economic wipeout have created new opportunities for the best money managers.

When news of Madoff’s misdeeds broke, Tran leapt into action. His staff phoned clients to explain to them why Madoff’s investors fell and why they weren’t going to suffer the same fate. They also took the opportunity for a check-in on how customers were weathering the recession.

"That part is crucial, because people are talking about their account balances and the economy more than anything nowadays, and for people to hear that their financial adviser took measures to insulate them from fraud and do the right thing — expect referral calls," Tran says. "Even though account balances may have gone down with the economic downturn, bad news is almost always better than uncertain news. It’s all about communication."

Joseph Sarappo, owner of Retirement Planning Specialists in Philadelphia, sees that as the silver lining in this year’s streak of financial frauds.

"With Madoff and other pyramid schemes in the news, there was an overall a feeling of unease among some investors, especially those at or close to retirement age," he says. "As a result, most wealth managers will tell you that they’ve taken to more consistent communication with their clients."

In the long run, this year’s disruptive effects could pay off for independent managers, say Seth Asher Rabinowitz, senior vice president of investor relations for Silicon Associates in Beverly Hill, Calif. His take: "It makes long-established wealth managers’ clients question their relationships, and consider giving new guys a chance." 

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Nordstrom Inc. marked Black Friday with an announcement that it will open an Nordstrom Rack at Arrowhead Crossing shopping center in Peoria.

The 36,000-square-foot store is expected to open next fall and will be the third in the Phoenix area, the retailer (NYSE:JWN) said. Nordstrom Rack is the Seattle firm’s off-price retail division and carries merchandise from Nordstrom department stores and Nordstrom payday loan no fax no credit check.com at steep discounts.

Other retailers at Arrowhead Crossing that include DSW, TJ Maxx, Barnes & Noble and ULTA. Developers Diversified Realty (NYSE:DDR) owns and manages Arrowhead Crossing.

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This is a quiz. What do the record-high Wall Street bonuses have in common with the record-low yields for savers?

Answer: They show yet another way that prudent people, especially those living on fixed incomes, are being screwed by the government’s bailout of the imprudent.

Here’s the deal. The government is spending trillions to keep interest rates down in order to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers’ incomes.

"It’s a direct wealth transfer from savers and retirees to overly indebted borrowers," says Greg McBride, senior financial analyst at Bankrate.com.

Since October 2007, when government intervention in the financial system began picking up speed, yields on the ultrasafe one-year and five-year investments that many retirees favor have tanked.

Two years ago the average yield on a five-year federally insured bank CD was 3.9%, according to Bankrate.com. Now it’s 2.2%, a drop of more than 40%.

Yields on one-year CDs have almost vanished: 0.92%, compared with 3.6%. On five-year Treasury securities, yield is down to 2.3% from 4.4%. On one-year maturities, you get a minuscule 0.3%, down from more than 4% in 2007.

The rates on AAA-rated one- and five-year tax-exempt bonds, another safe saver haven, are down sharply, too, for bailout-related reasons that we’ll get to in a bit.

As for money market mutual funds, fuggeddaboutit — the average is about 0.06% (no, that’s not a misprint) according to Crane Data, down from 4.6% two years ago.

It’s become customary practice — a wise one — that when the U.S. economy falters, the Fed cuts very short-term rates, the only ones that it controls, to stimulate business. But this time the Fed hasn’t confined its rate-suppression activities to the short-term markets.

It’s been a huge buyer of Treasury securities with maturities of up to 10 years, as well as mortgage-backed securities and Lord only knows what else. This buying pressure forces up the securities’ prices, and thus reduces their yields no fax needed payday loans.

The Fed, which declined to talk to me, is the major buyer of mortgage paper, in what’s clearly an attempt to hold down mortgage rates and prop up house prices. The Fed has also been a huge buyer of Treasury bills — securities with a maturity of less than a year — that Uncle Sam has issued to help fund the federal deficit and pay for various bailout programs.

But wait, there’s more. As part of the economic stimulus package, the federal government is promoting Build America Bonds, under which the Treasury pays 35% of the interest costs of project-related bonds issued by state and local governments. These BABs, as they’re known, are taxable securities rather than being tax-exempt as normal state and local bonds are.

The BAB program has sharply reduced the supply of new tax-exempt muni bonds. Almost $40 billion of Build America Bonds have been issued since the program began in April, according to Bloomberg.

Chip Norton, a muni maven at Wasmer Schroeder & Co., says that by reducing the supply of new munis, Build Americas have been a major factor in driving down yields on one- and five-year triple-A munis to 0.5% and 2.3%, respectively, from 3.4% and 3.6% two years ago.

One day, the federal government won’t be able to keep all these interest rates artificially low, as it’s now doing. The Chinese government, our major financier, is growing restless. The dollar’s falling sharply relative to other currencies is an ominous sign. If this problem accelerates, it will put pressure on the Fed to let interest rates rise to protect the dollar from a collapse.

But until rates go up, Wall Street will be chowing down on essentially free money, while fixed-income people living off their investments will have to eat into their capital, take more risk, or reduce their standard of living. A nice reward from their government for a lifetime of saving. Thanks for nothing, guys. 

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Dow Chemical Co said on Monday it would begin selling a new rooftop shingle next year that converts sunlight into electricity — and could generate $5 billion in revenue by 2015 for the company.

The new solar shingles can be integrated into rooftops with standard asphalt shingles, Dow said, and will be introduced in 2010 before a wider roll-out in 2011.

“We’re looking at this one product that could generate $5 billion in revenue by 2015 and $10 billion by 2020,” Jane Palmieri, managing director of Dow Solar Solutions, told Reuters in an interview.

The shingle will use thin-film cells of copper indium gallium diselenide (CIGS), a photovoltaic material that typically is more efficient at turning sunlight into electricity than traditional polysilicon cells.

Dow is using CIGS cells that operate at higher than 10 percent efficiency, below the efficiencies for the top polysilicon cells — but would cost 10 to 15 percent less on a per watt basis.

Dow Solar Solutions said it expects “an enthusiastic response” from roofing contractors for the new shingles, since they require no specialized skills or knowledge of solar systems to install.

The new product is the latest advance in “Building Integrated Photovoltaic” (BIPV) systems, in which power-generating systems are built directly into the traditional materials used to construct buildings.

BIPV systems are currently limited mostly to roofing tiles, which operate at lower efficiencies than solar panels and have so far been too expensive to gain wide acceptance.

Dow’s shingle will be about 30 to 40 percent cheaper than current BIPV systems.

The Dow shingles can be installed in about 10 hours, compared with 22 to 30 hours for traditional solar panels, reducing the installation costs that make up more than 50 percent of total system prices.

The product will be rolled out in North America through partnerships with home builders such as Lennar Corp and Pulte Homes Inc before marketing is expanded, Palmieri said.

Dow received $20 million in funding from the U.S. Department of Energy to help develop its BIPV products.

The company also produces fluids used in concentrated solar systems, in which sunlight is used to generate heat that produces steam to power a turbine.

In addition, it supplies materials used to help manufacture photovoltaic panels and increase their efficiency.

Dow shares were up 4.4 percent at $24.67 on the New York Stock Exchange in afternoon trading.

(Reporting by Matt Daily, editing by Dave Zimmerman and Gerald E. McCormick)

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One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, according to Morningstar Inc.

It’s part of a broader shift by many investors who have been scared away by stocks, despite the market’s hefty rebound from its March low. They’ve been piling into the greater safety of bonds, and TIPS — while not without risk — are about as safe as you can get.
The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren’t necessarily the best short-term investment. But historically low interest rates and the federal government’s growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

Here are some common questions and answers about TIPS:

How do TIPS work?

Introduced by the government in 1997, TIPS are a type of Treasury bond — investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you’re paid the adjusted principal or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn’t seem so good, until you consider what havoc inflation might wreak no teletrack payday loans. The difference — or "break-even rate" — between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries’ current 3.32 percent yield, TIPS investors will be glad they paid for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

How have TIPS’ values held up lately?

Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS in the middle of the performance pack among fixed-income fund categories.

How can I buy TIPS?

TIPS are available for purchase from the Treasury at http://www.treasurydirect.gov to avoid brokerage fees. If you’re not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities but can be traded like a stock.

TIPS appear to carry little risk. Is that the case?

Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Fed boosts interest rates faster than inflation grows, or before inflation sets in, TIPS’ values will erode.

They also can be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients’ orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they’ve bounced back.

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