Targeting inflation
Inflation expectations might be all over the place, but that has not stopped dealers trying to sell inflation-linked structured products. John Ferry looks at what is on offer from an asset class that has always been trickier than others for structured product dealers
The inflation derivatives market is not nearly as transparent or liquid as, say, the equity derivatives market, which makes pricing more difficult. Still, over the past five years or so dealers have been keen to sell investors structured products that provide synthetic exposure to inflation variables. But in the old days, before the financial crisis kicked in, inflation levels in the US and Europe were at least relatively stable. In the terminology of the popular press, central banks were said
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