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UK economy

Either longer dated index linked gilts are very vulnerable, or the UK economy is

If at the beginning of 2014 you had made a list of what you thought would be the best performing fixed income asset classes globally for the coming year, it’s very unlikely you’d have put UK index-linked gilts at the top. It’s probably even less likely that you’d have put Argentina’s (hard currency) bond market in second place, especially if you had been told that Argentina would default in 201…

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The New Era for Bank Bonds: Send In The Clowns?

The following is a long piece, but we feel it has potentially dramatic implications for the bank bond market.

Last week saw the much anticipated capital raisings from Lloyds-HBOS and RBS. Lloyds has managed to raise £13.5 billion in new shares with HMT’s holdings remaining at 43%, whilst RBS has raised £25.5 billion from the Treasury, and a further £8 billion from the Treasury in the form of co…

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Free falling

Today’s mortgage approvals numbers came out at a record low (see this comment for why we love mortgage approvals so much). Weakening mortgage approvals is no surprise – the housing psychology is moving to a bear market from a buyers perspective, and the mortgage lenders are strapped for cash so the number of willing providers of finance is collapsing. But it’s the pace of the decline that is st…

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Full steam ahead for the gilt market

Gilts have been going at a rate of knots, thanks to the squall that has been the credit crunch. The benchmark 10 year gilt yield plunged from 5.46% at the end of June 2007 all the way down to 4.51% at the end of December, and UK government bonds returned 8.6% in the second half of 2007. It was the best half year since the shipwrecks of H2 1998 (a period that saw Russia default and the collapse … Read the article