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BofA: Misleading UK inflation, Past And Present, Point To UKTi Underperformance

GILTS

Bank of America write “the April energy price cap reduction is likely to help propel UK inflation to target, but things are not so pretty under the hood.”

  • They go on to suggest that “the UK inflation persistence problem hasn't gone away and will need materially higher real policy rates to deal with it, relative to peers.”
  • “But with UK breakevens so high, bearish UK real rates versus Eurozone equivalents is the cleaner trade. We continue to propose shorting 10-year area UK linkers against equivalent OATei issues.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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