Kames' Hull: Cloudy horizons continue to support bond valuations

The events of July and August cemented rates in the UK at all-time lows. With the cheapest bond in the yield curve being the 30-year gilt (yielding 1.4%), there has been little respite for conservative allocation to fixed income markets.

The events of the six weeks after the referendum have calibrated 10-year gilts in range between 0.5% and 1%.  We believed that in July investment grade corporates would provide better yield opportunities for investors and this has proved, and continues to be, the case.  The Bank of England has given an added fillip to corporate spreads with its £10bn corporate bond purchase programme.  This kicked off at the end of September and looks set to proceed at a leisurely pace but remains an important anchor for valuations. Generally, constructive views of the bond market may be tempere...