UK Market Monitor Q1 2023

Real Gilt yields decreased c.26bps across the curve. The change in Nominal Gilts yields was more varied across maturities. The short end (3Y) remained broadly unchanged.

However, the 5Y, 12Y and 20Y fell by 24bps, 30bps and 21bps, respectively. At the longer end, the 30Y nominal yield only fell by 8bps.

CPI inflation remained elevated through the quarter, with February CPI at 10.4%. Despite the falls in utility and fuel prices inflation is expected to feel “sticky” for much of the year. Given resilient economic conditions, there is a possibility of bank rates rising further in the near term to 4.50% from the 4.25%.

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European life insurers to boost ESG investment

A survey of European life insurance companies that collectively oversee €2.73 trillion in assets, commissioned by AlphaReal, the specialist manager of secure income real assets, reveals 92% plan to increase their allocation to investments with a positive environmental and social impact, while the remaining 8% say they will do so in the near future.