Anticipating Rate Rises
As we entered 2018 there was lots of talk that the Bank of England was planning to raise Interest Rates through the year; as a result the yield on 10 Year Gilts started to rise – this means that their price is falling as investors do not want to “lock in” to low yields.
The graph below shows how this happened in January as the yield rose from historic lows of less than 1% to almost 1.7% in mid February.
Through March the Chancellor’s Spring Statement and some less optimistic GDP forecasts as a result of concerns regarding our exit from the EU say yields fall again as the chances of a rate rise decreased.
However, with the Bank of England MPC meeting in May it seems the prospect of a rate rise was increasing as yields again picked up, only for them ultimately to remain on hold.
As is often the case what people think may happen as more of an effect than what actually happens!
On this Day - 11th May 1812
British Prime Minister Spencer Percival was assassinated in the House of Commons, apparently mistaken by his killer, bankrupt broker John Bellingham, for someone else. He is the only Prime Minister in Britain to have been assassinated.
