European Sovereign Debt Roiled by Fears of New Energy Crisis

European bonds fell and traders scaled back wagers on interest-rate cuts as they gamed out a familiar scenario: an energy supply shock that sends prices soaring and stokes inflation.

Short-dated UK and Italian debt led the selloff as spiking energy prices threatened to handcuff central banks, while longer-tem debt risks being hobbled by governments having to spend more. Wagers on a European Central Bank cut this year vanished almost entirely, having been set at roughly 50:50 on Friday. Traders slashed bets on a Bank of England cut in March.