Innovation is key to UK gilt market

Assessing the direction of UK gilt yields over the past five years has required a mixture of skill, luck and innovation. The latter attribute has been particularly important as subsequent regulatory and supply factors have driven UK bond yield levels adrift from normal economic fundamentals. UK bond fund managers have gradually acquired a skills set distinct from their international counterparts. By way of examples, we include traditional measures that use the future predictive features of bond yields, effectively dismissing the theoretical notion that bond coupons are re-investe...