Higher inflation means lower real returns on bonds. UK gilt yields look attractive on paper, but once you strip out inflation expectations, investors are getting less than 1% in real terms. For some, that's reason enough to look beyond the traditional 60/40 portfolio.
The Debasement Trade: A Narrative
One of the big themes that has quietly but steadily emerged over the last twelve months is what market watchers have come to call the debasement trade. It didn’t begin with any single dramatic event; rather, it built slowly from ideas that long pre‑dated today’s political headlines. Even before Trump returned to power, one of his advisers had laid out the blueprint in a paper dubbed the “Mar-a-Largo Accord” - a proposal centred around a coordinated dollar devaluation aimed at making the American rust belt competitive again.
Equities have recovered strongly from the tariff shock earlier in the year. Dollar weakness vs Sterling has weighed on the relative performance of US equities; however, this was a step-change and there are concerns for Sterling too. Gold has continued to perform very strongly on the “debasement trade” and Central Bank buying. Within Bonds, Emerging Markets are in better shape than Developed Markets, in our view.
Long-term UK gilt yields are rising despite falling inflation expectations and BoE rate cuts. Explore how debt sustainability concerns and reduced demand for bonds are driving this unusual market shift.
 Some platforms pay decent rates on cash. Others trouser the "net interest margin" - when the interest they earn on platform cash is more than they pay on platform cash. This is something the FCA has flagged in a Dear CEO to platform providers when the rates have been unfair to Consumers.
So, advisers: if you like a platform, but don't like their cash rates, then consider smarter cash management solutions. Basic rate taxpayers: if your client is a basic rate taxpayer then use a money market fund. This is a way of accessing wholesale sterling money markets, whilst disintermediating the banks who have a regulatory requirement to hold money markets too. Additional or higher rate taxpayers: if your client is an additional or higher rate taxpayer then use near-term low-coupon direct Gilts. The capital and interest is guaranteed by HM Treasury, and the amounts are unlimited. Their low coupon means the bulk of the quoted "Yield To Maturity" is capital gains which are CGT exempt for Gilts, meaning higher overall Gross Comparable Yield relative to money markets and cash for higher rate taxpayers. By sticking to near-term (<3 year) gilts, there is very low (<3 year) duration risk. 
Although the Bank of England cut rates, long-dated Gilts yields are rising (so their values are falling).
Whilst there have been structural and trading shifts driving Dollar weakness, there is downside risk to Sterling too.
The article argues for a tactical shift out of bonds into UK equity income for multi-asset portfolio
Under pressure
In recent months, the U.S. dollar has come under pressure, with many observers attributing its weakness to the perceived end of American exceptionalism and a supposed rotation of capital flows out of the U.S. This narrative has gained traction alongside the belief that the eurozone may be on more solid footing than previously thought. However, in truth, there have been no significant flows out of the U.S. Figures published by the US department of Treasury debunks the claim for rotation out of the US. The primary driver of the dollar’s decline has been hedging activity, not structural reallocations or changes in economic fundamentals. We believe that, over time, fundamentals will reassert themselves—and when they do, the dollar is likely to recover further. 
Where next for the UK economy? Hermione Taylor outlines the challenges at our Elston Investment Forum 2025.
Read on for more details. 
Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news. Update on latest gilt yields. Changes in Gilt yield curve. Gilts auction results. Gilts ETF flows. For UK financial advisers.
 In this podcast for FT Adviser, Henry Cobbe explores the idea of an Operation Brit-Twist.
Listen to The Asset Allocator Podcast here 
Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news. Update on latest gilt yields. Changes in Gilt yield curve. Gilts auction results. Gilts ETF flows. For UK financial advisers.
Elston Consulting, the investment solutions provider supporting UK financial advisers, today announces the publication of its White Paper “Operation Brit-Twist: How the issuance of more Ultra Low Coupon Gilts could attract UK Retail investor demand to help reduce the size and cost of UK Government Debt. The white paper is available here.
Click read more to read the summary. 
Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news. Update on latest gilt yields. Changes in Gilt yield curve. Gilts auction results. Gilts ETF flows. For UK financial advisers.
Our latest monthly commentary for investing in UK gilts for UK financial advisers.
Includes:
The “Mar-a-Lago Accord” is a concept, not an event. Some are advocating a new currency accord and debt restructuring to fix the US balance sheet.
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