Sun, Jan 03, 2016 - Page 13 News List

European bonds set to be aided by ECB

BENCHMARKS:Analysts forecast a strong start to the year with EU investor demands for bonds expected to be strong, which could support another ECB deposit rate cut


“Gilts have been a bit of a sideshow,” said Azim Meghji, the London-based head of UK fixed income at Santander Asset Management, which manages the equivalent of US$170 billion.

“The focus for most investors has been what the ECB are going to do and what the [US] Fed will do and those have been two competing themes throughout 2015, which has left gilts at the mercy of where the broad market for government bonds has gone,” Meghji said.

The benchmark 10-year gilt yielded 1.96 percent as of 1pm close on Friday in London. The yield dropped to a record-low 1.325 percent on Jan. 30, last year and peaked at 2.21 percent in June.

With UK inflation near zero and the outlook for international growth remaining shaky, BOE officials have less incentive to raise interest rates. Recent data showed wage growth, a key focus of deciding monetary policy, had slowed and so policymakers can remain cautious for the time being, Meghji said.

“After 2014 being a blockbuster year, 2015 being a mediocre year, I wouldn’t expect 2016 to be significantly different at this stage than the year we just had,” Meghji said.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top