France's Caisse d'Amortissement de la Dette Sociale (Cades), the Paris-based agency charged with paying down the government's social security deficit, last week moved to flesh out Europe's growing inflation-linked bond market with a E500m ($500m) deal targeted at the shorter end of the curve.

The six-year bond, the first inflation-linked offering of the year, is set to exploit fears that European inflation could be about to take off after a prolonged period of stability. Cades is understood to have been particularly keen to target the medium sector of the curve because it offers investors a hedge against a near-term spike in inflation. Of the five euro-denominated inflation-linked bonds currently in issue, none have maturities of less than 13 years.