Favourable Condition For GBP Bonds
UK economy is heading off a cliff.
This has resulted UK 30 year bond yield to resume its downtrend. Hence this is benefiting GBP bonds whose issuers are less reliance on UK economy.
We had shared about 2 GBP bonds in our earlier posts:
- Aviva 4.375% 12Sep2049
myasiaprivatebank.blogspot.sg/2016/12/aviva-4375-12sep2049-gbp.html?m=1
- Prudential 5% 20Jul2055
myasiaprivatebank.blogspot.sg/2016/10/gbp-bond-idea.html?m=1
You can already see the post-Brexit flight of capital in the real world:
- Lloyds of London will move 50 of its 821 jobs to Europe in order to make sure it can continue to hold the EU financial passport.
- The Rivington biscuits company — which makes Pink Panther wafers — went bankrupt with the loss of 100 jobs. The company’s administrator cited “the sharp decline in the value of the pound against the euro” following the EU referendum in June. Spiralling costs were too much for the firm.
- The Japanese banks held a meeting with chancellor Philip Hammond in which they told him they might move up to 5,000 jobs to the EU if Britain couldn’t find a way to retain its EU credentials. “It’s fairly binary for them: they either have access to their markets or they don’t have access,” Hammond said.
- UK investment collapsed by £15 billion between July and September, according to the ONS (Office for National Statistics). It is only the fifth time there has been a quarterly decline in UK investment since 1987.
Bear in mind, this is what’s happening now — before Brexit has actually happened.
=> We haven’t even got to the real thing yet.
Read more at http://www.businessinsider.sg/how-brexit-will-affect-the-uk-economy-2016-12/#qvtfzl2HyFBprBei.99
Morgan Stanley shares bearish view on UK economy:
www.businessinsider.sg/morgan-stanley-brexit-article-50-analysis-britain-will-turn-into-a-bbb-economy-2016-12/#W3MSOs9y6R5CxGAf.97
When more pain comes at post Brexit, we suspect there would be further interest rate cut and increase in asset purchase program.
This condition is favourable for GBP bonds!
* Investors should draw full loan in GBP to buy GBP bonds to reduce FX risk.
This has resulted UK 30 year bond yield to resume its downtrend. Hence this is benefiting GBP bonds whose issuers are less reliance on UK economy.
We had shared about 2 GBP bonds in our earlier posts:
- Aviva 4.375% 12Sep2049
myasiaprivatebank.blogspot.sg/2016/12/aviva-4375-12sep2049-gbp.html?m=1
- Prudential 5% 20Jul2055
myasiaprivatebank.blogspot.sg/2016/10/gbp-bond-idea.html?m=1
You can already see the post-Brexit flight of capital in the real world:
- Lloyds of London will move 50 of its 821 jobs to Europe in order to make sure it can continue to hold the EU financial passport.
- The Rivington biscuits company — which makes Pink Panther wafers — went bankrupt with the loss of 100 jobs. The company’s administrator cited “the sharp decline in the value of the pound against the euro” following the EU referendum in June. Spiralling costs were too much for the firm.
- The Japanese banks held a meeting with chancellor Philip Hammond in which they told him they might move up to 5,000 jobs to the EU if Britain couldn’t find a way to retain its EU credentials. “It’s fairly binary for them: they either have access to their markets or they don’t have access,” Hammond said.
- UK investment collapsed by £15 billion between July and September, according to the ONS (Office for National Statistics). It is only the fifth time there has been a quarterly decline in UK investment since 1987.
Bear in mind, this is what’s happening now — before Brexit has actually happened.
=> We haven’t even got to the real thing yet.
Read more at http://www.businessinsider.sg/how-brexit-will-affect-the-uk-economy-2016-12/#qvtfzl2HyFBprBei.99
Morgan Stanley shares bearish view on UK economy:
www.businessinsider.sg/morgan-stanley-brexit-article-50-analysis-britain-will-turn-into-a-bbb-economy-2016-12/#W3MSOs9y6R5CxGAf.97
When more pain comes at post Brexit, we suspect there would be further interest rate cut and increase in asset purchase program.
This condition is favourable for GBP bonds!
* Investors should draw full loan in GBP to buy GBP bonds to reduce FX risk.
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