But risks of EU deflation still loom
Fighting the Fed
While foreign hedge funds have been driving down the value of the yen, now Japan insurers may strengthen the trend
Sponsored forum: US inflation derivatives
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Developments in the US inflation derivatives market
Nomura chief economist Richard Koo warns the US and European economies face double-dip recession and a prolonged period of economic stagnation if stimulus is cut too soon.
The resumption of issuance of government linkers, which now include deflation floors, should aid the development of inflation derivatives in South Korea
Inflation often accompanies the end of the recovery after a crisis, but while US companies may fear high inflation, banks and investors increasingly see deflation as the more serious risk to the US economy.
Hedge funds seeking protection against deflation and dealer hedging of residual short floor positions are cited as the reasons for a rise in prices on euro zero-coupon inflation options.