| Redemption yields on short-dated gilts continue to imply that interest rates will stay low at 0.5% or thereabouts for most of 2010 as our fragile economy continues to struggle 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 only modest growth in the share market with continuing volatility, and the bottoming out of the residential property market. We continue to think commercial property is turning around and offering positive future returns. RPI is rising again at 3.70% and CPI has increased to 3.50%, but they are expected to fall back shortly. Redemption yields on long dated gilts have remained risen slightly to 4.46%, and remain 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 Commercial Property, Overseas Fixed Interest, American and Pacific shares. An ongoing concern is national debt, and finance ministers across Europe need to persuade investors their national debt is under control. |
Bank of England base rate of interest | 0.50% pa | |||||||
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| Short dated gilts (redemption yields) | 8.00% Treasury Stock 2009 redeeming 25-09-2009 | 0.55% pa | ||||||
| 6.25% Treasury Stock 2010 redeeming 25-11-2010 | 0.93% pa | |||||||
| 3.25% Treasury Gilt 2011 redeeming 07-12-2011 | 1.47% pa | |||||||
| 9.00% Treasury Stock 2012 redeeming 06-08-2012 | 1.93% pa | |||||||
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| Long dated gilts (red yields) | 5.00% Treasury Stock 2025 redeeming 07-03-2025 | 4.46% pa | ||||||
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London Inter-Bank Offered Rate | LIBOR 1 WEEK | 0.51% pa | ||||||
| LIBOR 1 MONTH | 0.52% pa | |||||||
| LIBOR 3 MONTHS | 0.52% pa | |||||||
| LIBOR 6 MONTHS | 0.55% pa | |||||||
| LIBOR 12 MONTHS | 0.70% pa | |||||||
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| Consumer Price Inflation (CPI) | 3.50% pa | |||||||
| Retail Prices Index (RPI) | 3.70% pa | |||||||
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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 | ||||||
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| Exchange Rates | £1.00 buys: | €1.12 | $1.52 | |||||
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Fund Managers – Current House Views on Different Asset Classes | ||||||||
Asset Class | Positive | Slightly Positive | Neutral | Slightly Negative | Negative | Total Views Offered | ||
| Cash | | | | | 4 | 4 | ||
| Property | 2 | | 2 | 1 | | 5 | ||
| UK Fixed Interest | | | 1 | 3 | 2 | 6 | ||
| Overseas Fixed Interest | 2 | 1 | | 1 | | 4 | ||
| UK shares | 1 | 1 | 3 | | 1 | 6 | ||
| European shares | 3 | | 1 | 2 | | 6 | ||
| American shares | | 3 | 3 | | | 6 | ||
| Japanese shares | | 1 | 1 | 2 | 2 | 6 | ||
| Pacific (ex Japan) shares | 2 | 2 | 1 | | 1 | 6 | ||
| Data gathered on 1 March 2010. All figures given to 2 decimal places. Participating fund managers: UBS, Standard Life, Canada Life, Threadneedle, F&C, 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. |
