But inflation is what happened in the last 12 months while a bond pays over the next 12/24/36/60 months. The chance of outperforming inflation with a 5% GIC is astronomically higher than it is with a 1% one.
Now it's possible that 5%+ inflation persists for years, but the bond markets certainly aren't betting that. The current spread between inflation-adjusted and non-inflation-adjusted bonds is just over 2%, which is effectively the 5-year average inflation expectation.
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