2nd June 2011
Schroders: The UK gilt market - the big picture
Since the credit crunch, the UK economy has embarked upon a slow and steady path to recovery, despite strong headwinds, while gilt yields have struggled to return to levels that are more consistent with the current economic backdrop. Although there are some very valid reasons why UK gilts yields are so low, we are worried that the risks are skewed towards higher yields.
The problem for gilt investors is that the transition from lower yields to higher yields means that prices fall, and this could result in negative returns for gilt investors.
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