Gilt Sales Show U.K. Rating Not a Concern

Conrad

jim83 wrote: »

Fair point, I did say "nobody is buying" where I should have said "very few are buying". But my point remains the same - pension funds are hardly the cause of the recent price movements in gilts.

It's as much of a bubble as housing was.

Jim - what is not in the bubble category then?

Generali

Really2 wrote: »

Is he looks like he changed that then.:D


Or streched the above to support his argument (I am a quallified accountant but I would not class myself in the financial sector)

I wonder if !!!!!! will come back next week when Wooksters contract end.;)

Financial companies are big employers of accountants - the two aren't mutually exclusive.

PS I am neither Wookster or !!!!!!. I refuse to comment on whether or not I'm Elvis.

<southern drawl>Thank you very much.</southern drawl>

Really2

Generali wrote: »

Financial companies are big employers of accountants - the two aren't mutually exclusive.

PS I am neither Wookster or !!!!!!. I refuse to comment on whether or not I'm Elvis.

<southern drawl>Thank you very much.</southern drawl>

Agree, but if I was an accountant in the financial sector I would still say I was an accountant as an occupation not financial sector.;)

I am a Manager for my company, the sector does not realy matter unless I was trying to make my self more knowlageable on a subject than I actualy am.:D

Generali

Conrad wrote: »

Jim - what is not in the bubble category then?

House and equity prices seem to be well outside of what I'd consider to be price bubbles!

purch

House and equity prices seem to be well outside of what I'd consider to be price bubbles!

More like being sucked into a black hole, while we await how they emerge on the other side.

wonderman

jim83 wrote: »

You would have to be an absolute lunatic to buy gilts at the moment, particularly long dated ones.

The yield on a 30 year maturity is 4.12% - does even the most staunch deflationista think that inflation is going to be less than 4.12% averaged over that period? who could possibly be buying them?

The answer is that it's the "greater fool" approach to investing. Nobody is buying these things to hold to maturity, they are speculating that the yield will drop further so they will be able to sell the paper on for a profit. But they are making the fatal assumption that there will be someone stupider who is willing to buy from them in the future.

Ultimately the only buyer will be the BOE. With printed money.

This is what they said in Japan as the gilt yield went down and down .....and down......and down....and down some more. I think the same will happen here so gilts are a good place to be for the next few months whilst keeping an eye on the impact of QE; if inflation starts to come back then I agree it will time to unload the gilts; somehow I doubt we are there just yet.

Masomnia

The argument that gilt yields will fall is one in favour of QE, in case this hasn't been mentioned, it means the banks are more likely to lend as the return on gilts falls.