No-deal Brexit: good or bad news for linkers?

Edito Growth outlook has been revised downwards in several jurisdictions, while crude oil prices are still barely more than $60/ bbl for Brent (still down year-on-year, see the chart o n the left ) and nominal interest rates have eased (to 0.18% for the 10-year Bund, 2.70% for the 10-year Note). In short, fundamentals are not favourable to an increase of breakeven inflation rates. Breakeven for the 10-year TIPS is the only one to have clawed back some ground, but it was coming off a low (having plummeted to less than 1.70% at the start of January). It currently stands at 1.9%, even though wage growth slowed in January. Breakeven for the 10-year Bund€i spent most of January below 1%. As for the 10-year BTP€i , which is reeling from the greater credit risk attendant to linkers, the breakeven is 30bp weaker. Breakeven for the 10-year index-linked Gilt has remained extremely volatile, this volatility reflecting the fluctuating risk of a no-deal Brexit. The risk has increased since the Brady amendment was passed, which has led to a rise of around 10bp of the breakeven.