Euro bonds offer useful currency hedge

Fund manager's comment

Strangely it was an interest rate cut which heralded the end of the four-year bull market in governm...

Strangely it was an interest rate cut which heralded the end of the four-year bull market in government bonds. The Fed cut its target for Fed Funds from 1.25% to 1% in June of this year and by September both US and UK 10 year government bond yields were more than 100 basis points higher. Why should a cut in rates lead to this? The Fed's commentary following the cut played down the threat of deflation and the economic cycle was portrayed as being normal. By normal central bankers mean that their actions will lead to a recovery in economic activity, which will in time lead to higher in...