Breakeven Inflation Analysis by Brian Romanchuk
The great inflation of the 1970s in the developed countries provoked strong economic (and political) reactions. In finance, investors searched for ways to protect themselves from inflation. The United Kingdom launched the first modern inflation-linked bonds in 1981. In addition to being of interest to investors looking for protection against inflation, these bonds also provide a market-based measure of inflation expectations. Since investors have skin in the game, the resulting forecasts might be better than a purely survey-based inflation forecast. More reliable inflation forecasts should be useful for policymakers that aim to control inflation.This report discusses the breakeven inflation rate that is implied by pricing in the fixed income markets. For those with a casual interest in the subject, it is probably good enough to view those inflation breakeven rates as a market-implied forecast for inflation. However, if one wants to delve into the analysis, it is necessary to come to grips with the complications in the subject. Is the forecast biased? Are there technical factors in the bond market that affect pricing? The objective of this report is to offer an intermediate-level introduction to these issues. The target audience is either those with an interest in finance and who are unfamiliar with inflation-linked bonds or economists who want to understand better the factors that affect inflation breakeven rates.
Brian Romanchuk founded the website BondEconomics.com in 2013. It is a website dedicated to providing analytical tools for the understanding of the bond markets and monetary economics. He previously was a senior fixed income analyst at la Caisse de dü¾Ž–”¼pü¾†˜¼t et placement du Quü¾Ž–”¼bec. He held a few positions, including being the head of quantitative analysis for fixed income. He worked there from 2006-2013. Previously, he worked as a quantitative analyst at BCA Research, a Montrü¾Ž–”¼al-based economic-financial research consultancy, from 1998-2005. During that period, he developed a number of proprietary models for fixed income analysis, as well as covering the economies of a few developed countries. Brian received a Ph.D. in Control Systems Engineering from the University of Cambridge, and held post-doctoral positions there and at McGill University. His undergraduate degree was in electrical engineering, from McGill. He is a CFA charter holder. Brian currently lives in the greater Montrü¾Ž–”¼al area.
| SKU | Unavailable |
| ISBN 13 | 9781775167624 |
| ISBN 10 | 1775167623 |
| Title | Breakeven Inflation Analysis |
| Author | Brian Romanchuk |
| Condition | Unavailable |
| Binding Type | Paperback |
| Publisher | Bondeconomics |
| Year published | 2018-12-07 |
| Number of pages | 148 |
| Cover note | Book picture is for illustrative purposes only, actual binding, cover or edition may vary. |
| Note | Unavailable |