Low pricing of inflation swaps takes buy side by surprise
Dealers expect inflation to peak sooner, but investors remain sceptical
Joost de Bakker, a multi-asset trader at Cardano Risk Management, says that whether markets are correctly pricing inflation expectations is “literally a trillion-dollar question”. The scale of the question has prompted a commensurately wide range of responses.
Central bankers in the European Union, UK and US have pledged to rein back inflation to 2% – as the prices of goods and services in those regions rise at rates not seen for 40 years. At a meeting of the Federal Open Market Committee on
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