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Navigating Uncertainty in Inflation Markets: The UK Case
Investors in UK inflation-linked bonds are facing two critical sources of structural uncertainty: volatility arising from the Brexit process, and questions about the deeply entrenched (yet problematic) Retail Price Index (RPI), to which UK “linkers” are tied. Navigating these uncertainties – and the pricing dislocations they may produce – requires a thoughtful and responsive investment approach that aims to sidestep risk while seizing opportunities that may arise. On 23 June 2016, as the results of the UK referendum to leave the EU were revealed, markets sought an equilibrium in a highly uncertain scenario. ... (full story)