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UK

Is The Weakness Spreading To Services?
Flash PMIs sent a mixed signal about manufacturing and service sector conditions across DM economies in July. The Euro Area release was particularly weak. An unexpected 0.7-point decline in the Manufacturing PMI and a 0.9 point drop in the Services PMI…
Daily Insights
GFIS Model Bond Portfolio Q2/2023 Review & Outlook: Positioning For Peak Interest Rates

In this report, we present our performance review of the BCA Research Global Fixed Income Strategy (GFIS) model bond portfolio for the Q2/2023, and the outlook and scenario analysis for the next six months. The portfolio return exactly matched that of the benchmark index during the quarter, as modest gains on government bond allocations in the US, UK and core Europe completely offset losses on spread product underweights. Looking ahead, the portfolio is positioned to capitalize on an expected slowing of global growth over the rest of the year through an overweight stance on government bonds versus spread product and above-benchmark duration tilts in the US and core Europe.

Global Fixed Income Strategy
UK Core Inflation Cools From 31-Year High
Softer-than-anticipated CPI inflation caused UK Gilts to rally and the British pound to weaken on Wednesday. Headline CPI inflation fell from 8.7% y/y to a 15-month low of 7.9% y/y in June – a greater decline than anticipations of 8.2% y/y. On a…
Daily Insights
UK Jobs Market Faces Lingering Inflationary Pressures
Hot UK wage data focused investors’ attention on the Bank of England’s battle against sticky inflationary pressures on Tuesday. The 7.3% y/y increase in weekly earnings (excluding bonuses) in the three months to May surpassed expectations of a 7.1% y/y rise…
Daily Insights
The Inflation Expectations Time-Bomb
Our Counterpoint service argues that it is not enough that inflation stabilizes at 3 percent for inflation expectations to be anchored and central banks must make inflation undershoot 2 percent for some time to prevent a repeat of the 1970s. The team…
Daily Insights
Interpreting The Message From Inverted Yield Curves
Has the yield curve lost its ability to “predict” recessions? The widely-followed 2-year/10-year US Treasury curve now sits at -100bps, but it has been inverted since April 2022. Investors have seemingly been on “recession watch” ever since, even though the…
Daily Insights
The BoE Returns To Outsized Rate Hikes
The Bank of England surprised markets with a larger-than-anticipated 50bps rate hike on Thursday, raising its policy rate to 5% versus expectations of 4.75%. Seven of the nine MPC members voted in favor of the rate increase. In particular, the rate hike is…
Daily Insights
UK Gilts Sell Off Amid Stubborn Inflation
UK gilts have sold off sharply over the past month, particularly at the short end of the yield curve. The two-year yield has risen by over 100bps since mid-May, while 10-year yields have increased by just over 70bps – causing the 2-year/10-year yield curve to…
Daily Insights
Will UK Equities Continue Underperforming?
In our May In Review Insight, we showed that last month, UK stocks posted the lowest z-score among all major global equity markets, underperforming their Eurozone peers. What explains this relative weakness? The chart above reveals that the performance of…
Daily Insights
The Non-US Implications Of Our Recent US Duration Upgrade

In this report, we follow up on the upgrade to our US duration stance from last week with a review of our rates views and government bond allocations outside the US. We conclude that while we now find US Treasuries to be more attractive from a value perspective, even better value is available in euro area and UK government debt.

Global Fixed Income Strategy

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