The Pride - Issue 5 - Autumn 2021 - Magazine - Page 11
Gilts or US Bonds?
400bps
300bps
200bps
100bps
0bps
-100bps
-200bps
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: Bloomberg, UK 10 year gilt yield minus US 10 year treasury yield
And finally
For the past few years, the world has
been a happy place - for investors at
any rate. We now need to be aware
QE has ended in the US and the UK
is in process of doing the same. The
European Central Bank is considering
rate hikes from mid-2019 and even
the Bank of Japan is talking about
being less market friendly. The biggest
question for investors in 2019 is can
their assets stand on their own two
feet? As Central Banks leave markets to
their own devices, many assets, bonds
included, may struggle to provide a
positive total return, never mind one
that keeps pace with inflation. We have
already seen this in the US.
However, this is no reason to despair.
The world is filled with opportunity
even more so now with bond markets
radically out of kilter with one another.
Taking a flexible approach by reducing
risk in one market but still seeking value
elsewhere may be a sensible approach
to investing for the next couple of years.
Issue 2 Winter 2018 - TH E P R I DE - 11