Robin's Round-Up of Financial Data - August 2010

Redemption yields on short-dated gilts imply that interest rates will stay low at 0.5% or thereabouts for the rest of 2010 as our fragile economy continues to struggle out of recession. Thereafter interest rates may start rising but not very rapidly. Over the next 12 months or so we may therefore see only modest growth in the share market with continuing volatility, and the early stages of a recovery in the residential property market. We continue to think commercial property is turning around and offers potential for positive future returns. RPI has fallen to 5.00% and CPI to 3.20%, and are expected to fall further. Redemption yields on long dated gilts have dropped to 3.88%, and remain low due to the ongoing demand to secure liabilities such as final salary scheme closures, With Profit fund closures etc which is bad news for potential annuitants. We think long dated gilt yields may pick up over the next few years as HM Government continues to issue gilts to pay for the economic stimulus package, but future final salary scheme closures may temper that. Fund manager house views favour shares in the UK, America and Pacific (ex Japan). An ongoing concern is national debt, our newly elected Chancellor and finance ministers across Europe must continue to persuade investors that debt is being brought under control.

Bank of England base rate of interest							0.50% pa
Short dated gilts (redemption yields)		8.00% Treasury Stock 2009 redeeming 25-09-2009					0.38% pa
		6.25% Treasury Stock 2010 redeeming 25-11-2010					0.68% pa
		3.25% Treasury Gilt 2011 redeeming 07-12-2011					1.04% pa
		9.00% Treasury Stock 2012 redeeming 06-08-2012					1.35% pa
Long dated gilts (red yields)		5.00% Treasury Stock 2025 redeeming 07-03-2025					3.88% pa
London Inter-Bank Offered Rate		LIBOR 1 MONTH					0.54% pa
		LIBOR 3 MONTHS					0.56% pa
		LIBOR 6 MONTHS					0.58% pa
		LIBOR 12 MONTHS					0.69% pa
Consumer Price Inflation (CPI)							3.20% pa
Retail Prices Index (RPI)							5.00% pa
Exchange Rates		£1.00 buys:		€1.20			$1.56
Fund Managers – Current House Views on Different Asset Classes
Asset Class	Positive	Slightly Positive	Neutral		Slightly Negative	Negative		Total Views Offered
Cash					1	1		2
Property	2		1		1	1		5
UK Fixed Interest			3		2	1		6
Overseas Fixed Interest	2		2		1			5
UK shares	2	1	2		1			6
European shares	1		1		2	2		6
American shares	3	1	1			1		6
Japanese shares	1	1			2	2		6
Pacific (ex Japan) shares	3	1	1		1			6

Data gathered on 1 August 2010. All figures given to 2 decimal places. Participating fund managers: Threadneedle, Standard Life, Canada Life, UBS, Aegon, F&C. 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.