Rising Rates
Interest Rate Rises
As you know interest rates are at a multi-year lows with the yield on 10 Year Gilts at less than 1.5%; up from their 2016 low of under 1% but still much lower than the 10 year high of over 5% back in 2008 when interest rates were much more normal!
If we took you back even further to the late 80’s early 90’s the yields were even higher in the double digits (as were interest rates – good for savers bad for borrowers!).
When looking at Gilts it is important to understand how they work; high yields attract buyers forcing the price/value upwards and the yield down. If investors fear interest rates rises or inflation that is potentially higher than the yield on offer they sell Gilts and the yield will rise as the price falls.
With bond markets possibly near the end of a 30 year “bull run” would an Exchange Traded Fund that increases in value as yields rise may well start to be very attractive.
On this Day - 16th March 1935
The first driving test pass slip was presented to Mr. R. Beene of Kensington, a pupil of the British School of Motoring. Tests were introduced on a voluntary basis and became compulsory in June.
