Fallen high-yield angels are cause for concern

Our positive view on gilts proved rewarding last month as they enjoyed a strong run and outpaced oth...

Our positive view on gilts proved rewarding last month as they enjoyed a strong run and outpaced other government-bond markets. March saw the beginning of quantitative easing and this should outweigh fears of increased gilt issuance. Fundamentals, in terms of economic growth and inflation, remain favourable for gilts. In contrast, the poor economic environment is unhelpful for both investment-grade and high-yield corporate bonds, although the technicals have improved. Within investment grade, there has been a lot of supply and new deals have come cheap to existing issues to get them away...