Big European investors are pushing back against sharp bond market swings that have upended expectations for central bank rate cuts, arguing they have gone too far even if surging energy prices raise inflation risks. Amundi, Europe’s largest asset manager, has bought short-dated British and Italian government bonds and Allianz Global Investors added to a position favouring longer-dated UK bonds, senior fund managers told Reuters on Tuesday. A surge in energy prices since the U.S.-Israeli war against Iran has rekindled inflation fears. At one point on Monday, as oil surged towards $120 a barrel traders briefly priced in a high chance of a Bank of England rate hike this year. Before the war they had bet on a cut this month. In an equally rapid U-turn on Tuesday, traders went back to pricing a 50% chance of a cut by year-end as oil prices dropped. Traders priced as many as two 2026 rate hikes from the European Central Bank on Monday, having priced a sizeable chance of a cut just last month. They were last pricing around a 70% chance of one rate rise by December. "It’s too early for central banks to act. So, we tend to fade this short term. If the market is pricing hikes like it is, I think it’s a good value proposition," said Gregoire Pesques, chief investment officer at Amundi, which manages 2.4 trillion euros ($2.79 trillion).