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Fixed Income Investor Refugees

Gilts, bonds, and interest-bearing shares
Laughton
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Re: Fixed Income Investor Refugees

#486723

Postby Laughton » March 15th, 2022, 1:05 pm

If I'm buying then probably not.

But then these are now in my pension where I want some more stable income and my, probably wrong, thought is that whilst inflation is going a fair bit higher I don't see interest rates going anywhere near as high.

Still have a fair bit of cash and will now wait to see response of FI prices/yields when Andy does raise rates.

Gan020
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Re: Fixed Income Investor Refugees

#486745

Postby Gan020 » March 15th, 2022, 3:35 pm

I have mixed feelings. As a saver I'm glad to see the prefs and bonds repricing to a higher yield, but on the other hand my fixed income portfolio is struggling a bit this year on a mark to market basis. It doesn't really matter to me as I hold almost no prefs or PIBS, only bonds and I will likely hold the bonds to maturity but nevertheless it is always nice to be sitting on a capital gain and have my options open.

Of course I'd prefer inflation to be benign whilst this repricing takes place!

My thinking is that the repricing reflects both some interest rate risk but also some credit risk and both and now here to stay for some while. The interest rate risk is hard to work out in my head. I see the central banks raising rates to curb inflation but I don't actually know how they do much of these without tipping economies into recession which would in itself help reduce inflation (at least in the longer term although short term I worry suppliers will take the easy route and raise prices)

It's hard to say when this repricing is going to finish. Probably a few days after the Fed an BOE rate decisions this week.
My perception is that the markets are getting a bit ahead of themselves as usual. We shall see. Having said that I think some of these retail bond and pref prices need to still pull back a bit. However, some don't and it's nice to be looking at options which I think reflect fair value rather than thinking everything just looks expensive.

What I do know is that it would be really helpful if these prices could last until the new ISA season so I can stuff another £40k away tax free.


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