Brighter now

Article Abstract:

UK government securities (gilts) are benefiting from lower long-term rates of interest in Germany and the US and a forecast that the rate of economic growthin both the UK and US is slowing down. Domestic investors are increasingly interested in gilts, but a continued weakness in pound sterling will hinder a narrowing of yiled spread for German and US bonds compared with UK bonds. Future trends in UK interest rate policy will have a major impact on gilts, and this in turn depends on inflation.

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UK gilts: gilt glory

Article Abstract:

Yields for UK government securities (gilts) may continue to drop in 1996 according to HSBC Markets' Roger Bootle. The international environment should be favourable for the gilts market in early 1996. Domestic factors such as lower inflation and weak exports should also help. Political uncertainty could create problems in 2nd half 1996 as an election approaches. The UK Labor Party presents less of a risk than it did in the 1970s, and the market has already taken much of the risk into account.

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Links that are not so risk-free

Article Abstract:

Political risk affects financial markets and index-linked government securities (gilts) are seen as a safe investment in the UK. Index-linked gilts give protection against risks of inflation but there is also the risk that borrowing could increase under a future Labor government. Equities may be a better investment since some equities may rise in value as a result of government policies such as a plan to invest in an information superhighway.

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