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Inflation Guy: Super Hero (guest: Michael Ashton)

The Market Huddle

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Is It Possible to Buy Brak Evens as a Dealer?

Inflation swaps should be about forty basis points above the break even. They don't really net, because the thing you're short, which is the nominal bond, goes on special a lot. And tips never go on special. So there's this financing bias,. If you are, if you're long brak evens as a dealer, ah, then you have this negative financing bias. You have to be compensated fyoure gingto be buying brakEvens, you have to be compensate by a lower, a lower break even.

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