Gilt Yields Will Not Rise Before Next Year

UK Government bonds have been very low for nearly a decade, but fixed income specialists are warning that there will be no uptick in gilt yields for some time

Karen Kwok 8 June, 2017 | 10:38AM

Risk-averse income investors are waiting in hope for gilt yields to rise. UK Government bonds have been very low for nearly a decade – with the 10-year gilt yield hovering below 3% since the global financial crisis. Rewind a to 1997 and a 10-year gilt would pay out close to 7% and in 1990 the yield hit 9%. Today the 10-year pays out a paltry 1.02%.

But those investors hoping for respite any time soon should not hold their breath, according to financial professionals.

“Do we think the UK gilts yield will recover to 4.5%? No, we don’t. The world has changed and moved on. We can only look at the US government bonds for that,” said Laura Frost, investment director with M&G.

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About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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