Bonds rally in the UK and overseas

By Kevin Adams, director UK fixed income at Credit Suisse The period from May to September saw a significant rally by bonds in the UK and overseas. Interest rate expectations that had been focused on rising rates before year-end reversed amid signs of slowing growth and carnage in the equity markets. Interest rate futures markets began to price in the prospect of additional rate reductions and two-year gilt yields fell briefly below 3.5%, as cash from the equity market was placed in the ultimate risk-free asset of short dated government bonds. The rally in equities durin...