Inches: UK gilt yield fears are unfounded

Royal London's Craig Inches says fears of a dramatic and prolonged spike in gilt yields are unfounded.

The £267m UK Government Bond fund co-manager expects 10-year gilts to reach a high of 4.5% in the next few weeks and end the year at 4%. He says there is no evidence the Government’s record borrowing programme and the ending of quantitative easing will push yields to record levels. “Lots of yield forecasts are predicated on the issue of supply. However, our research shows over last 30 years the correlation between supply and gilt yields is zero,” he says. “Supply creates its own demand, and in that environment you never have a problem selling them because people want a risk-free asset...