Short gilt bets implode as rally splits £ Strategic Bond sector

Past six months in bond markets have seen a reversion to ‘safe haven' assets such as gilts and treasuries

Liquidity is key for strategic bond managers negotiating volatile markets. The majority are holding high levels of cash and the most liquid government bonds, both to minimise volatility over the next few months and take advantage of opportunities as they arise. Where they are taking credit risk, most have brought this down over recent months as the economic picture has worsened, avoiding banks and sticking to higher quality corporates. The past 12 months in bond markets have divided neatly into the optimism that defined the latter half of 2010 and the pessimism that has been seen year...