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Energy Price Crunch Pushes Investors in Europe to Bet on Inflation

Record-breaking energy prices are driving bond investors to bet on a jump in eurozone inflation in the coming months, turning the trade bloc’s narrative of superlow price growth on its head, at least temporarily.

A key market-based measure of investors’ inflation expectations, a traded instrument known as a forward inflation swap, showed price rises peaking at an annual rate of 4.1% in November, nearly double the level in July and the most since 2008. The 2-year German bund break-even rate, a proxy for market expectations of inflation in the trade bloc’s largest economy in 2023, reached the highest point since at least 2012 on Friday, according to data from Tradeweb.

Energy Price Crunch Pushes Investors in Europe to Bet on Inflation Source link Energy Price Crunch Pushes Investors in Europe to Bet on Inflation

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