The most common question that bond fund managers have been asked since 2008 is when central banks will raise interest rates, says Mike Riddell, fixed income portfolio manager at Allianz Global Investors.
The second most common question is usually how much they will hike by when they do. It is now looking more likely that the next move in UK interest rates will be down rather than up, with a greater than half chance of a rate cut happening this year. The market is not pricing in a UK rate hike until summer 2020. But, ultimately, what the Bank of England does to interest rates over the short to medium term makes very little difference to how the gilt market performs, at least any gilts other than short-dated ones. So what is the main driver of gilt market returns if it is not the ban...
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