Inflation-linked products debate: Putting a price on inflation
The market is relatively young but it has had a brutal education over the past year as the financial crisis has swept through every corner of the financial markets. Where next for inflation-linked products?
MH, Redington 2008 was a cataclysmic year. What has the credit crunch meant for us?
CA, RBS The inflation market is still young, so supply and demand is crucial to how it operates and prices. Several years of favourable terms for long-dated corporate issuance, cheap monoline wrapping and attractive asset swap levels meant that we came out of 2006/07 with our most balanced market yet, particularly in the UK. For the first time, even inflation swaps were trading at a discount to bond breakevens.