Gilts set to weaken over medium term

Fund manager's comment

The relatively stable domestic economic environment and the additional yield available means the ste...

The relatively stable domestic economic environment and the additional yield available means the sterling high-yield market should continue to outperform gilts and investment grade bonds. While gilts rallied in August, relieved that the Monetary Policy Committee (MPC) only raised its repo rate by 25 basis points to 4.75%, rather than the much speculated 50 basis points hike, the market should weaken over the medium term. There is much press speculation that there will be another move on rates at the September meeting. Although we do not necessarily agree with this, we still expect to se...