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Gilt supply update: back to a world of issuance exceeding buybacks

In last week’s Pre-Budget report, UK Chancellor Alistair Darling announced that gilt issuance for the current financial year would total £225.1bn – a shocking and record figure, although not far off the £220bn that was originally planned in this year’s Budget. But while on one side we’ve had this huge volume of supply from the DMO, we’ve also had the unusual situation of the BoE busily mopping …

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What effect will the surge of government bond issuance have on government bond returns?

This is a question that numerous clients and members of the press have asked us so I thought it would be worth writing a brief comment here. 

Focusing on the UK, in yesterday’s budget, chancellor Alistair Darling said that gross gilt issuance will be £220bn this financial year, which is easily a record. There is much speculation as to whether the market is able to digest this much issuance.  If…

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Rapid changes in life expectancy will continue to drive the bond market

Life expectancy isn’t just increasing, the rate of change is actually accelerating, thanks to rapid medical advancements. Great news for humankind, great news for owners of long dated bonds, but a nightmare for pension funds.


Recent research from Paternoster, a company that buys up final salary pension fund schemes, has published a report estimating that if life expectancy continues to increa…

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