All Gilts articles
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White papersLDI market trends – getting things in perspective
The two key barometers of market levels for LDI are long-term interest rates and long-term inflation expectations.
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White papersMaking sense of corporate bond spreads
Pension scheme funding ratios have improved significantly, due to a rise in yields since the start of 2022, and continued growth asset performance. This has resulted in many taking the next steps towards their chosen endgame by topping up liability hedge ratios and simultaneously increasing allocations to corporate bonds.
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White papersDo elections really matter to investors?
Investors seek to track the evolution of the economic fundamentals that serve to anchor asset returns over a long-term time horizon. We look at what they are.
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White papersEndgame – the benefits of ‘buy and maintain’ credit
Due to higher gilt yields, many defined benefit pension schemes are now in a stronger funding position than they were a few years ago. To secure this improved status, schemes are looking to reduce investment risk by decreasing equity holdings and focusing on assets that will more likely provide the necessary cashflows to pay pensions.
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White papersNo winners in the Thames Water travails
Whatever angle you look at things from the prospects for future investment in the UK water sector don’t look good, for anyone. The travails of Thames Water especially (but other water companies are not exempt) have wrought such damage to the sector’s reputation that water, once a byword for the essence of life, is now more commonly aligned in headlines with words including risk, sewage and pollution.
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BlogFinely Balanced Decision Tips BoE to Cut
The Bank of England cut rates by 25 bps at its August policy meeting, but a series of aggressive rate reductions are likely off the table.
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White papersA fine time to lock in higher bond yields
Thinking about duration in investment grade credit hasn’t been top of clients’ minds in recent years – with good reason. Bond yields have been exceptionally low, with the Sterling five-year corporate bond yield falling from around 4% in the middle of the previous decade to almost 1.5% by the end of 2020.
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White papersThe snap election could put QE losses back in focus
Back in 2021, when the Bank of England (BoE) announced the end of quantitative easing (QE) and the beginning of quantitative tightening (QT), few commentators understood how out of kilter the Bank’s balance sheet had become compared to central bank norms. The result has been losses on the BoE bond portfolios that dwarf those of other central banks.
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White papersUK outlook brightens as rate cuts loom
The Bank of England held rates at 5.25% this week, but its accompanying statement made clear that, given the broader outlook for inflation, the prospect of rate cuts this summer has increased.
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White papersInvestors Cannot Ignore the Debt-Sustainability Question
Despite a pullback in bond yields, clients at our Solving for 2024 event were still uncertain about how to invest in a world of runaway government debt.
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White papersUp then (marginally) down again
Markets rose earlier in the week on hopes of an interest rate freeze from the world’s central banks; only to reverse course on the back of less dovish outlooks from the US Federal Reserve and the Bank of England.
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PodcastThe Investment Podcast: Dissecting the fallout from the gilt crisis
Just over a year has passed since the gilt market turmoil of September 2022, sparked by the UK government’s so-called ‘mini-budget’. The fallout from the crisis, as the pound fell and gilt yields spiked, prompted an emergency intervention by the Bank of England to restore orderly market conditions against a global backdrop of high inflation and rising interest rates. A significant change in asset class demand dynamics ensued as pension funds sought to meet collateral calls for their LDI mandates.
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White papersStubbornly high inflation sends bond yields higher
UK inflation fell by less than forecast in April, Wednesday’s data revealed, prompting expectations of further interest rate hikes, and pushing bond yields to their highest levels since October.
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White papersInflation Quarterly Monitor
In March, the UK Debt Management Office (DMO) announced its borrowing remit for fiscal year 23/24, alongside the Office for Budget Responsibility’s updated forecasts for gross financing. A small downward revision of £3.3 billion was made to the remit in April, resulting in less short and long dated conventional gilts being raised via auctions but no change to inflation-linked gilts.
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White papersGilts: Testing market appetite for UK Government debt
The Gilt market is bigger than it has ever been – and more volatile than it has been in decades, which throws up interesting and exciting opportunities.
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White papersUK Fiscal Budget: main political, social and market implications
The UK fiscal budget main political implications: The budget is designed to improve public finances, regain market trust, and help the Conservative government regain some ground ahead of the next election.
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White papersUK government woes continue to overshadow markets
Investors unnerved by conflicting plans of the Bank of England and the UK Treasury as central bank seeks to put brake on growth to tame inflation while government wants to put foot on the growth accelerator.
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White papersU.K.’s Mini-Budget Causes Major Market Moves
The U.K.’s sweeping fiscal package caused widespread disruptions—leading the BOE to intervene and restore market stability—which could lead to more hikes in the near term. Meanwhile, labor stats in the U.S. next week should help show just how far the Fed might go.
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White papersHoping for the Best, Preparing for the Worst
We’ve officially embarked on a very peculiar tightening cycle—one in which inflation is at levels more associated with the peak of the hiking cycle, and not the start.
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White papersBanking problems impede India’s reforms
There has generally been a positive response to Prime Minister Narendra Modi’s structural reforms, but there has been an investment slowdown in the medium-term, and recent scandals, huge bad loans and ATM cash shortages imply a banking system that is in crisis – to the tune of $210 billion.
