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 update, we discuss the Bank of England's revised 2025 GDP forecast, April 2025 UK inflation data, and rates updates. 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.
Markets have been on a see-saw as the world digests Trump's tariff policy that risked stalling world trade and triggering a recession. Yesterday US Treasury Secretary announced a 90 day pause in reciprocal tariffs, possibly triggered by systemic strain in the US Government Bond market. US equities surged +9.5% the largest one-day rally since 2008. We summarise a tumultuous week in markets.
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We take a step back at Trump's Trade War, look at lessons from 2018, contrast sector and factor performance. This public version is a shortened extract from our private call with our Adviser clients, so all data and comments are as at Thu 3 Apr 2025. 
Our latest monthly commentary for investing in UK gilts for UK financial advisers.
Includes:
Shrinking a pot is different to growing a pot. And shrinking it in downmarkets can be dangerous without guardrails. This is why we designed a “Managed Buckets” based approach for Retirement Portfolios.
Trump is putting reciprocal tariffs on world trade to start negotiations on steps to rebuild US manufacturing. Reciprocal tariffs means putting tariffs on imports from those countries which put tariffs on US imports. What does it mean for markets. What does it mean for the global economy. Will tariffs make America great again?
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.
Transatlantic security is going through a reset. Europe needs to shift to hard power to guarantee its own security.
Trump’s chaotic tariff policy is destabilising markets and raising concerns around impact on US economic growth and inflation.
Trump's volatile tariff policy is creating uncertainty in global markets. This could hinder not help the US economic outlook.
Domestic politics is becoming more polarised.
International politics is moving from a unipolar to a multipolar world. The transatlantic security alliance is under threat. The weaponisation of tariffs is leading to deglobalisation. How to make sense of this increasingly fragile world? We explore some of the key themes of this new world dis-order.  What is driving gold prices?There are three key drivers of the gold price in 2024-25. Some of these trends are structural, some are more short-term. 1. Geopolitical Risk and "Risk-Off" DemandFirstly, gold is an uncorrelated asset class meaning that it is an accessible and liquid diversifier. It can act as a shock absorber during period of elevated geopolitical risk. So the recent uncertainty around Trump's tariff policies and what that could do to equity markets (earnings risk) and bond markets (inflation risk), makes Gold an "risk-off" Alternative. 2. Central Bank Buying: Structural Demand from Emerging MarketsSecondly, Central Bank buying: although the Western world has reduced the amount of gold it holds in Central Banks reserves, Developing Markets - such as China, India and Russia - have been buying physical gold, such that overall, Central Bank gold reserves are on the increase. This is has been a medium-term trend for BRICs countries to reduce their dependency on the Dollar. This is a medium-term structural trend. 3. Gold as a Store of Value and Inflation Hedge: Debt ConcernsFinally, a store of value and inflation hedge: as markets worry about debt indigestion - the oversupply of US Government Bonds and the long-term sustainability of Western e.g. US/UK debt levels, Gold is a "real asset" that preserves value should there be any risk of devaluation of debt securities. Gold is a "real" store of value because it also acts as an inflation hedge: whereas nominal Bonds cannot hold their real value when inflation rises, Gold tends to hold its value in real terms and has withstood inflation shocks through revolutions, wars and even back in Biblical times! This is a long-term structural trend. Find out more
 The Bank of England, the UK's central bank, today cut rates by 25bp from 4.75% to 4.50% on weaker than expected economic growth. What is the market reaction?The market reaction is an increase in the FTSE 100 for two reasons: firstly lower borrowing costs are positive for corporate earnings, secondly Sterling has weakened on the news (reflecting the weaker economic growth outlook). Because FTSE 100 companies have predominantly USD-linked earnings, the translation effect makes the FTSE 100 look higher when Sterling weakens relative to the Dollar. What is the outlook for the UK economyWe focus on the three key macro drivers for the UK economy: Growth, Inflation and Rates. The Bank of England's central projections consistent with the MPC's forecast were changed as follows, relative to their November 2024 meeting: 2025 GDP Growth was downgraded from +1.50% to +0.75% 2025 CPI Inflation was upgraded from +2.75% to +3.50% The expected interest rate at the end of the three forecast period were increased from 3.50% to 4.00%. In summary this shows lower growth, higher inflation and higher terminal rates. (See chart) Might the Bank of England cut more?The Monetary Policy Committee (MPC) vote was 7-2 in favour of a 25bp cut. Interestingly 2 voted to cut rates even deeper by 50bp to 4.25% to support economic growth SummaryAfter being slow to respond to the inflation shock in 2022, it now looks as though the Bank of England may have overtightened relative to growth and is now exposed to "stagflation risk". Stagflation is when the economy is caught in a lower growth and higher inflation trap. This will be a challenge for policymakers to navigate.
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