AAA

FIXED INCOME

Bond managers have cut duration to record lows, anticipating a fresh spike in gilt yields as they settle at a higher trading range.

The UK should still be a AAA credit by current definitions as the risk of a default is virtually non-existent, Henderson's Simon Ward has said.

Moody's has cut its rating on the guaranteed debt of Barclays and Lloyds following the downgrade of the UK's credit rating last week.

Yields on UK government debt were climbing early this morning following Moody's decision to downgrade the UK's credit rating to Aa1, but equity investors shrugged off the news to send markets higher.

Moody's decision to strip the UK of its AAA credit rating on Friday night will have a further negative impact on sterling and could hit gilts too, analysts have suggested.

Managers are setting up portfolios for a pull-back in equity markets, looking at put options and moving more defensive as several indicators post sell signals.

Germany's AAA credit rating will come under increasing scrutiny this year as investors shift their focus, according to Cosimo Marasciulo, head of government bonds and FX at Pioneer Investments.

The CF Miton Special Situations and CF Miton Strategic portfolios have fallen from the top of the IMA Flexible Investment sector to the bottom on a one-year view because of the managers' view on equities.

The Chancellor is on a collision course with bond markets over plans to change how inflation is calculated.