Future still looks bleak for volatile gilt market

Isis Asset Management, James Foster

The gilt market looks set to continue to be volatile as long as Chancellor Brown continues to borrow from it, while the fundamentals of investment grade bonds look excellent

Gilts, investment grade or high-yields bonds? Let's start by looking at the last year. Gilts offered a total return of about 2%, which is not that surprising, as they are a safety-first asset. In an environment where people are a little bit less cautious, gilts can suffer. Investment grade bonds did relatively well with a return of 5%-5.5%, which isn't too bad in bond land. High-yield bonds have done very well however, even outperforming equities, which is particularly satisfying But looking forward, things must change, and the man who holds the key to change in the gilt market is Chanc...