Credits suffer muted year while gilts retain vibrancy

The UK bond market experienced muted performance over 2005 but positive economic news failed to slow...

The UK bond market experienced muted performance over 2005 but positive economic news failed to slow a vibrant gilt market, according to Theo Zemek, head of fixed interest at New Star Asset Management. "Overall, 2005 was a surprising year for the bond markets," she says. "Throughout the year there were increasing inflationary pressures in the system, but after initial uncertainty, it was clear the UK economy was not going into recession." Yet Zemek says gilt purchases from insurance companies, life groups and overseas banks continued to drive the market. The year ends with New Star's Ze...