Daily Brief – British Government Securities-Gilts

British Government Securities-Gilts

Gilts are increasingly popular as a place for UK investors to park savings: the Interactive platform for example is seeing a 42% increase in gilt transactions and a 65% increase in gilt investments. Part of the reason is that in the first 6 months of 2025 no less than GBP 80 billion of short dated gilts mature and that money has to be re-deployed. However a yield of 4.27% for 2 year gilts compares very favourably with the miserly interest rates offered by the high street banks to depositors with 1.75% applied for the unwary.

EUR/GBP 0.8356.

Cosy Coalition

That is what some are fearing: that Germany’s two centrist parties the CDU and Social Democrat parties will for the 5th time form a coalition that will not have the bite to make the changes that Germany needs. The two big areas are how the coalition will tackle the growing popularity of the far right AFD and equally as important how it will tackle the flagging German economy – and that is a concern for all of Europe. Yesterday the Bundestag convened for its first session under… Olaf Scholz who remains in place until terms are nailed down and Friedrich Merz takes over as is expected.

EUR/USD 1.0789.

Cross Class UK

Until the 1960’s it was generally accepted that the rigid class system between Upper, Middle and Lower remained in place in the UK. However with the age of Aquarius culminating in the summer of love in 1969, those boundaries became blurred. Scroll forward 60 years and the further progress in the breakdown of class divisions can be measured through social media: no less than 47% of lower socio economic Brits have Facebook friends in higher socio economic categories. That compares with 39% in the USA. Having said that in the UK 60% of high status Facebook friends are still with others in the same category.

GBP/USD 1.2912.

Indonesia

The Indonesian Rupiah is at levels not seen since the 1998 Asian financial crisis for those of you with good memories with USD/IDR 16,654. At that time I was in Hong Kong and working in the Asian markets was akin to trying to catch falling knives. Now the Central Bank, Bank Indonesia blames global uncertainties-US tariffs, geopolitical tensions and trade disputes with China at the forefront- and domestic challenges resulting from budget cuts, President Subianto’s fiscal initiatives and cuts in education and public works. Maybe reprise your earlier years all Silver Surfers and add Bali to the list of potential 2025 holiday destinations.

EUR/JPY 162.48.

Supernatural

This day in 2000 Santana began a run at the top of the charts for their new album Supernatural. Exactly 30 years after their seminal album Abraxas, Carlos Santana and the band proved that they were indeed capable of re-inventing themselves and able to capture the zeitgeist of the new Millennium. The song considered to be the best on the album is Wishing It Was:

Beauty and grace is what touches me most
Good time can put me in fear
Always feel safe when things are bad
So I cannot let you come near
It seems that I thrive on the dark side of things
I always feel alive when the death bell rings
Now you have come and bring out the tears in me
Pain never makes me cry, but happiness does
It’s so strange to watch my life go by
Wishing it was
Wishing it was more like a fantasy
Where everyone surprises me
Wishing it was
This feeling won’t last cause I cannot survive
I tell you I’ve been here before
When it’s moving this fast
It’s a matter of time
One of us walks out that door
It seems that I thrive on the dark side of things
I always feel alive when the death bell rings
Now you come and you bring out the tears in me
Give this some thought

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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