UKGILT UK Gilt Index : Bullish and Bearish Analyst Opinions

Bank of England will cut interest rates.

Emma Wall states UK retail investors are buying gilts for the compelling yield (near 5%) and that actively managed fixed income funds with nimble mandates are popular to exploit volatility in inflation expectations. High nominal yields provide attractive income, and professional management is seen as a way to navigate an uncertain rate environment exacerbated by the war's impact on inflation. LONG as retail flow data shows clear demand driven by yield attraction and a strategy to actively manage interest rate risk. A sustained spike in inflation from an energy shock could lead to further bond sell-offs, pressuring prices.

The ongoing war with Iran is expected to keep UK gilt yields elevated, negatively impacting the UK's fiscal position and thus bond prices.

The market is now fully pricing in three Bank of England rate hikes for the current year, which implies continued upward pressure on UK Gilt yields and downward pressure on their prices.

*UK TWO-YEAR BOND YIELD CLIMBS 20BPS AS ENERGY PRICES SOAR

Once again, the UK government bond market is exhibiting its "high beta"—in this case, seeing borrowing costs rise more sharply in reaction to higher oil prices than those of other advanced economies. #economy #markets https://t.co/l6myMUHUnc