Showing posts with label bond breakevens. Show all posts
Showing posts with label bond breakevens. Show all posts

Monday, 23 April 2012

Caveat emptor: triggers linked to inflation rates

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Before over-engineering the number you wish to impose for locking into your inflation-only hedge you may wish to consider the shortcomings of the measure you are using to compare against the inflation level you have set yourself for hedging. There are two commonly used measures: cash breakevens and inflation swaps. We consider each in turn.