Is the bond market a better guide to inflation expectations than surveys?
Bond EconomicsThe breakeven inflation rate is a market-based measure of expected inflation. It is the difference between the yield of a nominal bond and an inflation-linked bond of the same maturity.
Since investors' money is on the line, they presumably have an interest in pricing inflation correctly. It is viewed as a more reliable measure of inflation expectations than those measured by surveys. In this article, I explain how this concept is used in bond market economic analysis.
Primer: What Is Breakeven Inflation?
Brian Romanchuk
No comments:
Post a Comment