Europe's inflation investors sharpen their focus

A distorted inflation picture in Europe since the onset of the sovereign debt crisis last year is boosting interest in country-specific inflation exposure, with more newcomers entering the asset class through alternative investments

Gang Hu, Credit Suisse

Despite the fact that fear of rising inflation due to increasing oil prices and the effect of quantitative easing remains a reality, there are few inflation-linked structured products in existence. One reason for the low issuance level is the combination of very low interest rates and high inflation against a backdrop of tightening funding spreads, which makes institutional investors more eager to hedge using nominal rates as a proxy rather than going for pure inflation hedges, according to Bob