Global economies still a bond-friendlyenvironment

While bonds proved to be a safe haven during the turbulent equity markets of 2001, little will change in the coming 12 months to indicate this bull run will come to an end

When considering the outlook for ster- ling corporate bonds in 2002, it is worth reviewing their performance in 2001. It was a very strong year for corporate bonds, compared to UK gilts, the usual relative measure, and as an asset class of its own. The table below highlights the strong returns for 2001. The fourth quarter provided over 40% of the excess return over gilts. The need for yield, as equity markets continued to disappoint, forced UK life companies to increase their weighting towards corporate bonds, thus protecting their solvency ratios. This allocation coincided with U...