In August, a closely-watched warning signal started to flash red for danger. The yield on 10-year UK gilts dropped below that of 2-year short-dated gilts.
It highlighted a rising tide of concern about the near-term outlook for the global economy as investors pulled money out of shorter-dated investments and sought safety in longer-term assets. Why UK income investors 'should exercise caution' The last time the yield curve inverted was in August 2008. Then, it ushered in the Global Financial Crisis (GFC) and worst recession since the Great Depression. The period shone a light on the perils of certain investments (such as collateralised debt products) that were supposed to be low risk and high return. With the consequence of a finan...
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