Sweden Faces Price Danger Leading EU Rebound: Inflation Bonds

Sweden’s bond market is signaling the biggest increase in inflation expectations in the advanced world, pushing the central bank to raise interest rates as soon as this week.

The gap between yields on the nation’s five-year inflation-linked bonds and notes that aren’t indexed to the rate of consumer price changes jumped 0.56 percentage point since Sept. 1 to 1.89 point as of 5 p.m. London time on Oct. 22. The increase in that spread, a so-called breakeven rate that represents investors’ expectations for inflation over the life of the bonds, was the largest among developed economies.