Surging energy costs have spread fear among investors in recent weeks that inflation isn’t going away. One place where the strains are being felt most acutely is the U.K., where bond markets have exhibited some wild moves.
The most dramatic swings took place with government bonds whose coupons are linked to inflation. Those bonds, and derivatives known as swaps, are seen as a measure of where investors believe inflation is headed. Yields on them surged to their highest levels in over a decade.