Foster removes 12% short on gilts as rate hike 'deferred'

Artemis' James Foster has taken off a 12% short position in UK gilts and US treasuries in the past few weeks, in the view the MPC will not hike rates until August.

The manager of the £529m Strategic Bond fund said the fall in CPI to 4% in April, down from 4.4%, had pushed markets expectations for an interest rate hike back. “A rise in interest rates in May was a given up until that point, but subsequently sentiment changed and it looked like the Bank of England was not going to change rates,” Foster said. “We were short gilts and treasuries prior to that, in anticipation of increased rates. However, we felt a rise was less likely and the market discounted a rise, so we took the short position of 12% off.” Foster said he would look to reinstat...