Robin's Round-Up of Financial Data for April 2009

 

Redemption yields on short-dated gilts imply interest rates will start rising in the next 12 months and continue to rise quite rapidly thereafter. The inference is the need to curb inflationary pressures from a recovering economy. Historically shares recover before the end of a recession, on receiving the first set of reliable data that the end of a recession is coming. Over the next 12 months or so we may therefore see an upturn in the share market, followed by an increase in interest rates and inflation, and the bottoming out of the residential property market. RPI has dropped to 0% and CPI has crept up a little. We expect CPI to decline and RPI to go negative over the next 6 months, and then for that position to reverse in 12 months or so. Redemption yields on long dated gilts have dropped due to quantitative easing, which is bad news for potential annuitants. This should reverse as HM Government increases gilt issuance to pay for the economic stimulus package. Fund manager house views show UK fixed interest, UK shares, American shares and Pacific shares in favour.

 

Bank of England base rate of interest								0.50% pa
Short dated gilts (redemption yields)		8.00% Treasury Stock 2009 redeeming 25-09-2009						0.70% pa
		6.25% Treasury Stock 2010 redeeming 25-11-2010						0.88% pa
		3.25% Treasury Gilt 2011 redeeming 07-12-2011						1.63% pa
		9.00% Treasury Stock 2012 redeeming 06-08-2012						2.22% pa
Long dated gilts (red yields)		5.00% Treasury Stock 2025 redeeming 07-03-2025						3.89% pa
London Inter-Bank Offered Rate		LIBOR 1 WEEK						0.69% pa
		LIBOR 1 MONTH						1.10% pa
		LIBOR 3 MONTHS						1.73% pa
		LIBOR 6 MONTHS						1.96% pa
		LIBOR 12 MONTHS						2.12% pa
Consumer Price Inflation (CPI)								3.20% pa
Retail Prices Index (RPI)								0.00% pa
National Savings & Investments		3 Yr Index-Linked Savings Certs offering RPI +						1.00% pa
		5 Yr Index-Linked Savings Certs offering RPI +						1.00% pa
Exchange Rates				£1.00 buys:		€1.09		$1.44
Fund Managers – Current House Views on Different Asset Classes
Asset Class	Positive	Slightly Positive	Neutral		Slightly Negative		Negative		Total Views Offered
Cash		1	1				1		3
Property					2		2		4
UK Fixed Interest	1	2	1		1				5
Overseas Fixed Interest			1		1				2
UK shares	1	1	2				1		5
European shares		1	2		1		1		5
American shares	3	2							5
Japanese shares		1	3		1				5
Pacific (ex Japan) shares	1	2	2						5

 

Data gathered on 1 April 2009. All figures given to 2 decimal places. Participating fund managers: BlackRock, UBS, Schroders, Scottish Widows, Canada Life.   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.