Inflation options popular as investors look for protection

A number of insurance companies and pension funds have bought 0% floors this year amid concerns about deflation. One high-profile trade has received particular attention, encouraging other market players to express their views. But the focus could be about to change to inflation protection. Mark Pengelly reports


Markets are uncertain. There are some participants who believe the last dregs of the current round of government economic stimulus will push inflation higher - a fear reinforced by recent signs the US is preparing a fresh burst of quantitative easing. Then there are those who worry about a double-dip recession and see deflation as the major risk. And it is this latter fear that has been the driving force in the inflation options market for much of this year.

"The market has reflected the fact

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