Pattullo eyes bank bond spike on positive stress tests

Henderson head of retail fixed income John Pattullo believes subordinated bank bonds could enjoy a sharp price spike should this month's European stress tests prove positive.

After falling 5.1% in May on the European debt problems - which was the strongest decline since the 14.5% slide in March 2009 - Tier 1 bank bonds stabilised last month, up 0.4%. Pattullo expects further price appreciation following the release of the stress test results on 23 July. "We have been overweight banks for quite a while now and there has only really been three down months since March last year," Pattullo says. "I believe we are heading in the right direction. Growth may be lower than many expected, but there is still growth. I do not think there will be a double-dip, whic...