Inflation risk

Introduction

risk-0704-sr-cover1-gif

Over the past couple of years, the inflation-linked (or linker) market has undergone dramatic growth and development. Issuance of inflation-linked bonds has increased substantially, but it’s in the area of inflation-linked derivatives that the pace of progress has been most marked.

Bankers involved in the area say trading volumes of inflation-linked derivatives – not just swaps but also floors, caps, swaptions and, increasingly, hybrid structures that may incorporate an equity component – have mu