Blacksquare's Peel on the year ahead for fixed income

Blacksquare Capital's chief executive Christopher Peel gives his outlook for gilts and bonds this year.

The year ahead is going to be challenging for UK bond investors and returns are likely to be negative in both nominal and real terms. Gilt yields remain extremely low and inflation by any measure is running well above the Bank of England's CPI target of 2%. The impact of quantitative easing and the government's purchases of gilts is difficult to judge, but it is becoming clearer these types of measures have run their course. Growth in the UK according to Citigroup Global Markets will be 2.5% this year and 2.3% in 2012, so the need for base rates to remain close to zero at 0.5% is q...