AAA

Legal & General Investments (LGI) is set to launch an index fund linked to the highest quality issues in the sterling corporate bond market at the end of the month.

The UK's highly-prized AAA-credit rating should not be seen as the 'be all and end all' of government policy, Chief Secretary to the Treasury Danny Alexander has said.

ABSOLUTE RETURNS

Capital Economics expects the Bank of England to cut the UK's base rate from 0.5% in an effort to stimulate growth, after last week's GDP figure showed the economy is shrinking faster than feared.

J.P. Morgan's Nick Gartside and Barings' Alan Wilde have warned the UK's AAA-status is at risk of downgrade following the shock contraction in the second quarter's GDP.

German finance minister Wolfgang Schaeuble recently said the unnaturally low yield for bunds is not the financial godsend it first appeared to be. Rather, it is a real source of concern.

FIXED INCOME

The UK is increasingly likely to lose its AAA credit rating - but this may not spell disaster for the domestic bond market, according to M&G's Jim Leaviss.

Moody's has downgraded the credit ratings of five of the Netherlands' largest banks as the country's economy struggles with a domestic recession and the effects of the eurozone crisis.

A strong pound could damage both the economy and portfolios as sterling hits new highs and the UK enters a technical recession for the second time in three years.