Fears of higher inflation in the US combined with increased costs associated with dealing in cash securities as a result of Basel regulations are aiding the continued growth of the US inflation derivative markets. Average monthly volume in the first six months of 2015 more than doubled over the same period in 2014 at inter-dealer broker Tradition, coming in at 13.7bn versus 6.4bn contracts traded. The growth is adding to an ongoing trend of the last five years, but one more month of average volumes will make 2015 a record year already. Dealers and brokers say investors have increased their presence in US inflation derivatives in 2015 due to opportunistic breakeven inflation rates.
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