Robin's Round-Up of Financial Data January 2010

Redemption yields on short-dated gilts redeeming 2010 remain low, implying interest rates will stay low over the next 12 months implying a fragile recovery as the UK comes out of recession. Thereafter interest rates may start rising and continue to rise quite rapidly thereafter. Over the next 12 months or so we may therefore see modest growth in the share market, followed by an increase in interest rates and inflation, and the bottoming out of the residential property market. We continue to think commercial property will turn around and offer positive returns. RPI is positive again at 0.30% and CPI has increased to 1.90%. Redemption yields on long dated gilts have risen around 4.44%, and are staying low due to quantitative easing and final salary scheme closures which is bad news for potential annuitants. We think long dated gilt yields may pick up over the next few years as HM Government increases gilt issuance to pay for the economic stimulus package, but future final salary scheme closures may temper that. Fund manager house views currently favour most asset classes. The only out of favour asset classes are Cash and Japanese shares.

Bank of England base rate of interest							0.50% pa
Short dated gilts (redemption yields)		6.25% Treasury Stock 2010 redeeming 25-11-2010					0.55% pa
		3.25% Treasury Gilt 2011 redeeming 07-12-2011					1.29% pa
		9.00% Treasury Stock 2012 redeeming 06-08-2012					1.86% pa
		8.00% Treasury Stock 2013 redeeming 27-09-2013					2.29% pa
Long dated gilts (red yields)		5.00% Treasury Stock 2025 redeeming 07-03-2025					4.44% pa
London Inter-Bank Offered Rate		LIBOR 1 WEEK					0.50% pa
		LIBOR 1 MONTH					0.50% pa
		LIBOR 3 MONTHS					0.51% pa
		LIBOR 6 MONTHS					0.54% pa
		LIBOR 12 MONTHS					0.79% pa
Consumer Price Inflation (CPI)							1.90% pa
Retail Prices Index (RPI)							0.30% pa
National Savings & Investments		3 Yr Index-Linked Savings Certs offering RPI +					1.00% pa
		5 Yr Index-Linked Savings Certs offering RPI +					1.00% pa
Exchange Rates		£1.00 buys:		€1.13			$1.62
Fund Managers – Current House Views on Different Asset Classes
Asset Class	Positive	Slightly Positive	Neutral		Slightly Negative	Negative		Total Views Offered
Cash						3		3
Property	1	1	1		1			4
UK Fixed Interest	2	1			2			5
Overseas Fixed Interest	1	1			1			3
UK shares	1	1	2			1		5
European shares	2		2		1			5
American shares	1	2	2					5
Japanese shares		1	1		1	2		5
Pacific (ex Japan) shares	2	2			1			5

Data gathered on 4 January 2010. All figures given to 2 decimal places. Participating fund managers: UBS, Threadneedle, Standard Life, Canada Life, BlackRock. DISCLAIMER Please note, whilst every effort has been made to ensure the information contained in this document is correct, sometimes the information given to us by third parties is inaccurate. We cannot therefore be held responsible for the accuracy of this information and it should not be relied upon for making any decisions.