Personal Finance & Money Asked on April 13, 2021
I find very interesting that Bloomberg Barclays Euro Inflation Linked 10+ (Euro) securities increased their price in the last 6 month with about +4.4%.
Looking on the equivalent USD TIPS my increase (should be also long term securities but cannot find their duration now, TIPS.L) for the same period was of "only" about 0.76%.
Can anyone explain the sharp increase in price of the inflation linked (FRC4, EURO) ones ? They should be influenced by an increase in inflation (significant considering the high rise?) or something as people really see as imminent one – but at the same time there is no rise in the rate for the new long term securities (of the same type, non inflation linked) – as I know, hence they not justify the increase from this perspective ?
Long term securities of the same type (government, VETY) did not had an increase higher than 0.6% during same time – that should suggest the difference is not linked to perspective even lower interest rates but to perspective inflation factors. If that is the case why newer bonds emitted now do not reflect that an actual inflation is "expected" ?
Briefly:
Can anyone explain the sharp increase in the price of the inflation-linked (FRC4, EURO) ones?
People's trust in EUR stability erodes.
Correct answer by sudonym on April 13, 2021
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