Auction of 10-year inflation-linked Gilts draws highest demand since 1998

An auction of 10-year inflation-linked Gilts drew a record amount of bids.

Some market commentary argued that the result of Wednesday's auction underscored investors' concerns over inflation.

The sale attracted a bid-to-cover ratio of 3.54, the highest for any index-linked bond since the Treasury first sold index-linked debt, back in 1998.

Returns on index-linked Gilts are tied to the Retail Price Index.

On average, inflation protected Gilts were pricing in an average RPI rate of just under 3.4%, against January's year-on-year rate of increase in RPI of 1.6%.