In the UK, demand for corporate bonds continued to flag during April as credit-rating downgrades in Greece, Spain and Portugal exacerbated concerns that corporate borrowers might find it harder to fulfil their obligations to lenders.
Ratings agency Standard & Poor’s cut its credit rating for Greece to “junk” status, and downgraded Spain and Portugal. Nevertheless, high-yield bonds remained relatively unscathed by Greece’s predicament –probably because high-yield investors tend to be more accustomed to market volatility.
The UK economy expanded by 0.2% during the first three months of 2010, compared with growth of 0.4% in the final quarter of 2009, and this slower rate of growth was attributed to weakness in the services sector. The International Monetary Fund (IMF) expects the UK economy to expand by 1.3% during 2010 – a figure unchanged from its January forecast.Meanwhile, investors were heartened by a report from the Organisation for Economic Co-operation and Development, which expects economic growth in the UK to outpace most of its G7 colleagues during the second quarter of 2010.
However, the British Chambers of Commerce warned that, although the UK had managed to avoid falling into a “double-dip” recession in the first quarter of 2010, the UK’s economic recovery remains fragile and vulnerable to setbacks. Meanwhile, the National Institute of Economic & Social Research expects the UK economy to “crawl” during 2010, hampered by anaemic consumer spending. The institute forecasts the UK economy will grow by just 1% this year, compared with UK Treasury forecasts for growth of between 1% and 1.5%.
UK inflation accelerated more rapidly than expected during March, rising by 3.4% year on year, according to the Office for National Statistics. Prices were pushed higher by rising costs for transport, fuel, food, clothing and footwear. Sterling’s weakness has increased prices for commodities and other imported goods.
During April, UK house prices registered their first double-digit annual growth since July 2007, according to the Nationwide Building Society. Meanwhile, the British Bankers Association reported that UK mortgage approvals had been 20% higher in March 2010 than in March 2009.
Among UK retail investors, bonds proved the most popular asset class during March, representing approximately half of all net retail sales. The best-selling sector during the month was Sterling Strategic Bond, followed by Global Bonds. Among institutional investors, meanwhile, the Sterling Corporate Bonds sector was the best-selling Investment Management Association grouping, while the Gilts sector experienced substantial outflows.
Link to sterlings website
No comments:
Post a Comment