UK linkers rebound on demand for inflation protection

UK index-linked bonds have rebounded from the worst quarterly drop for almost two years as inflation fears grow following last month's better-than-expected Q3 GDP figures.

The securities have gained 0.3% since the GDP figures were announced on 26 October, according to Bloomberg and Bank of America Merrill Lynch data. Linkers had lost 1.345% since the start of October. Bank of England governor Mervyn King is today set to unveil the central bank's fresh inflation report. Inflation stayed at 3.1% in September, higher the government's 3% limit. "We see value in short-dated index-linked bonds as we believe inflation will remain sticky in the near term," said SWIP bond manager Graeme Caughey told Bloomberg. "With the policy that the Bank of England is purs...