Inflation surge ignites 39;linker39; bond trading
Bank revenues from trading inflation products on the rise
Record inflationsensitive exchange traded product inflows

LONDON, Feb 8 Reuters Almost overnight, inflationlinked bonds have become the hot ticket in global financial markets, pitting banks against hedge funds in a battle for market share and scarce trading talent.

The 4.4 trillion market for inflationlinked bonds, known as linkers, has shot to prominence as prices spiral higher in a postpandemic world of supply chain glitches and abundant government spending.

There is tremendous demand for the product, which is hot, just like green bonds are hot, said Ben De Forton, head of debt capital markets SSA France at BNP Paribas.

When the United States issued its first Treasury Inflation Protected Security TIPS in 1997, inflation was just above 2, now price growth is running at 7 in the world39;s biggest economy and not far behind in Europe.

Investment products whose payouts rise and fall in line with inflation have been around in various forms for several centuries. But in their current one they date to the 1980s when Britain issued its first linker, followed by Australia, Canada, Mexico, the United States and several emerging economies.

But while linkers are hardly new, most fixed income traders in London or New York will have begun working long after the last major inflation flareup in the developed world, the 1970s.

They will probably have cut their teeth…