Which Inflation Rate? by Alex Saitta and Yuxin Li
ARTICLE SYNOPSIS ...Which Inflation Rate? by Alex Saitta and Yuxin Li
So you're going to use an inflation rate to gauge the market you're interested in. Which one are you going to use? Which one fits your needs?
Bond yields provide a fixed coupon or income. As the rate of inflation rises, the coupon's buying power declines; as the rate of inflation falls, more
goods and services can be purchased with that fixed coupon. For this reason bond yields are strongly linked to the inflation rate, and the inflation rate is of paramount importance to bond investors.
Which inflation rate, though? When talking about infla...