Much has been made of the perceived UK economic slowdown, but the picture appears more mixed than outright negative.

The Bank of England regularly publishes a summary of business conditions, based on data compiled by its agents, who produce frequent quantitative assessments of economic conditions across the country. The latest survey data released last week, and shown in the table below, shows strengthening manufacturing (particularly for exporters), tightening labour markets and erosion of spare capacity, while retail and consumer-facing sectors are softening.

alt=”agentdata” width=”757″ height=”814″>

We believe pressure on the consumer from rising inflation and lesser wage inflation is likely to ease before the end of the year.

In that context, 10-year gilt yields at 1.06% do not look appealing to our mind, with inflation yet to peak and the possibility of some increase in fiscal spending in the government’s November Budget.

For now though, ‘safe-haven’ flows owing to tensions with North Korea, coupled with a lack of gilt supply over the next month, is keeping gilt yields low.


Your email address will not be published.

Newton does not capture and store any personal information about an individual who accesses this blog, except where he or she volunteers such information, whether via email, an electronic form or other means. Where personal information is supplied, it will be used only in relation to this blog, and will not be collected or stored for any other purpose. Comments submitted via the blog are moderated, and, as a result, there may be a delay before they are posted.

Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those countries or sectors. Please note that holdings and positioning are subject to change without notice.