Spreadbury notes norm of 4% yield since 1600s

Fidelity fixed income manager Ian Spreadbury sees no reason why long dated government bond yields ca...

Fidelity fixed income manager Ian Spreadbury sees no reason why long dated government bond yields cannot stay below 4% in the long term. Looking at the pattern of yields since the end of the 17th century, he noted a yield of around 4% is the norm. The exceptions have been the Napoleonic War, the two World Wars and the inflation spike of the 1970s to 1990s. In such circumstances, he argued gilts are at least fair value, not least because long gilt yields of 3.84% are around 75% of nominal GDP growth for 2006, factored in at 4.1%, in line with the long-term average. Spreadbury said while t...