Capital Daily More headwinds for gilts to come from home than abroad The UK may have one of the most shielded economies against US tariffs. But stagflation and fiscal risks at home provide strong headwinds for its bond market. 28th March 2025 · 5 mins read
UK Economics Focus UK Fiscal Event Response: Unfinished fiscal business Despite saying the “world is changing”, the Chancellor, Rachel Reeves, today just tinkered with fiscal policy. This left the impression that bigger changes lie ahead. Indeed, the pressure to raise... 26th March 2025 · 16 mins read
Asset Allocation Outlook Asset allocation in an inflating AI bubble We think US equities will fare better in 2025 than the other major asset classes we monitor, as the AI bubble inflates further. But we expect equities elsewhere generally to lag those in the US and... 17th December 2024 · 29 mins read
Bonds & Equities How worrying is the surge in Gilt yields? While the market fallout from yesterday’s UK budget announcement is still a very long way from the 2022 “mini-budget” debacle, the surge in Gilt yields and fall in sterling over the past couple of... 31st October 2024 · 5 mins read
Capital Daily What to make of today’s sell-off in Gilts The sell-off in the Gilt market after today’s budget announcement in the UK probably reflects concerns that the Chancellor’s fiscal plans will result in an increased a supply of bonds and less... 30th October 2024 · 5 mins read
UK Economics Focus Autumn Budget - Big tax rises, but economy may end up stronger This Budget is big, both in the way it defines the government’s plans and the money it raises and spends. The key point is that it loosens fiscal policy relative to previous plans and is therefore... 30th October 2024 · 16 mins read
Bonds Update Will gilts shrug off this week’s Budget? The possibility of looser fiscal policy than previous planned in the upcoming UK Budget on 30th October suggests the risks to our forecast that the 10-year gilt yield will fall to 3.50% by end-2025... 28th October 2024 · 4 mins read
FX GBP likely to fall by more against EUR than USD We expect sterling to weaken by ~4% against the euro and ~1% against the dollar by end-2025. This reflects our view that the Bank of England will loosen monetary policy by more than what investors are... 11th October 2024 · 4 mins read
Asset Allocation Update Gilt yields and sterling may have further to fall While expectations for interest rates in the UK have already fallen by 40bp by end-2025 since mid-July, our projections for UK CPI inflation to remain below the 2% target for much of 2025 and 2026... 15th August 2024 · 3 mins read
FX Markets Update Sterling still likely to weaken later this year While the pound has outperformed all major G10 currencies so far this year, we still expect it to depreciate against the greenback later in the year as the Bank of England eases monetary policy more... 24th July 2024 · 3 mins read
UK Economics Focus Could new fiscal rules spur on the economy? The current fiscal framework is not perfect and could be reformed to improve investor confidence in the management of the public finances, tilt the composition of spending towards investment and... 12th June 2024 · 16 mins read
UK Housing Market Focus Interest rate cuts won’t reduce mortgage costs much Just as fixed mortgage rates have shielded homeowners from rising interest rates, they will prevent households’ interest costs from falling rapidly when interest rates are cut. While borrowers on... 6th June 2024 · 14 mins read
UK Economics Focus Inflation may soon be too low Our forecast that CPI inflation will fall from 3.2% in March to below 2.0% in April and below 1.0% later this year would leave inflation much lower than the Bank of England and the consensus forecasts... 16th May 2024 · 28 mins read
UK Economics Focus Spring Budget – Pre-election boost to turn into post-election drag The net giveaway of £13.9bn (0.5% of GDP) in 2024/25 in the Budget may help end the recession before an election later this year. But fiscal policy is still being tightened in 2024/25 and that... 6th March 2024 · 16 mins read
UK Economics Focus Spring Budget 2024 Preview – Electioneering beats prudence Using most of the fiscal headroom of about £15bn to cut taxes in the Spring Budget on 6th March would show that the Chancellor is putting the election before prudence. Such tax cuts may help lift the... 20th February 2024 · 21 mins read
Asset Allocation Update The relative outlook for US and UK markets We think that both the Fed and the BoE are finished hiking interest rates and will cut by more than investors are discounting over the next couple of years. We also expect the US and UK economies to... 21st September 2023 · 4 mins read
