Robin's Round Up of Financial Data October 2010

Redemption yields on short-dated gilts imply that interest rates will stay low at 0.5% or thereabouts well into 2011 as our fragile economy continues to recover from recession. Thereafter interest rates may start rising but not very rapidly. Over the next 12 months or so we may therefore see only modest growth in the share market with continuing volatility, and the early stages of a recovery in the residential property market. RPI has fallen to 4.70% and CPI has remained at 3.10%, both are expected to decline. Redemption yields on long dated gilts have risen slightly to the still very low level of 3.46% which is bad news for potential annuitants. This is due to the ongoing demand to secure liabilities such as final salary scheme closures and continuing low interest rates, against which gilts seem reasonable value and are currently in demand. We think long dated gilt yields will pick up over the next few years as interest rates rise and other asset classes become more favourable, however future final salary scheme closures and further quantitative easing may temper that. Fund manager house views favour UK, American and Pacific (ex Japan) shares and overseas fixed interest. An ongoing concern is national debt, our newly elected Chancellor and finance ministers across Europe must persuade investors debt is being brought under control.

Bank of England base rate of interest							0.50% pa
Short dated gilts (redemption yields)		8.00% Treasury Stock 2009 redeeming 25-09-2009					0.48% pa
		6.25% Treasury Stock 2010 redeeming 25-11-2010					0.57% pa
		3.25% Treasury Gilt 2011 redeeming 07-12-2011					0.85% pa
		9.00% Treasury Stock 2012 redeeming 06-08-2012					0.98% pa
Long dated gilts (red yields)		5.00% Treasury Stock 2025 redeeming 07-03-2025					3.46% pa
London Inter-Bank Offered Rate		LIBOR 1 WEEK					0.55% pa
		LIBOR 1 MONTH					0.55% pa
		LIBOR 3 MONTHS					0.57% pa
		LIBOR 6 MONTHS					0.64% pa
		LIBOR 12 MONTHS					0.55% pa
Consumer Price Inflation (CPI)							3.10% pa
Retail Prices Index (RPI)							4.70% pa
National Savings & Investments		3 Yr Index-Linked Savings Certs offering RPI +					Not in issue
		5 Yr Index-Linked Savings Certs offering RPI +					Not in issue
Exchange Rates		£1.00 buys:		€1.16			$1.59
Fund Managers – Current House Views on Different Asset Classes
Asset Class	Positive	Slightly Positive	Neutral		Slightly Negative	Negative		Total Views Offered
Cash						4		4
Property	1		2		1	1		5
UK Fixed Interest			3		2	2		7
Overseas Fixed Interest	2	1	2		1			6
UK shares	2	2	2		1			7
European shares	2		3		2			7
American shares	3		3			1		7
Japanese shares	1	1	3		1	1		7
Pacific (ex Japan) shares	3	1	2			1		7

Data gathered on 1 October 2010. All figures given to 2 decimal places. Participating fund managers: Threadneedle, Standard Life, Canada Life, UBS, Aegon, F&C, Black Rock. 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.