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#Brent #Stoxx We know very little about trading bonds, other than understanding the conventional wisdom is of Government Bonds being regarded as very low risk, generally safer than Corporate Bonds. As a result, the interest rate paid will be lower in comparison but now we’ve looked hard at the T68 UK Treasury Bond, data since 2020 looks very like a vote on the integrity of successive UK Governments, the value dropping from around 340 quid down to a low of just 40 pounds. Visually, it’s like the hysteria of Liz Truss never actually went away and with government competence looking rather questionable, we suspect if Truss returned, the markets would flourish strongly!<\/p>\n
We had to grin, the start of October proving quite a strong day for the FTSE, the reason given being Astrazeneca Plc had decided (for now) to remain with their main listing on the FTSE and headquarters in London, rather than escape the country and head for the financially healthier climate of New York and Wall Street. Their share price being up 11.2% was reminiscent of the Scottish Football Team declaring any game a resounding success, if they failed to concede (too many) goals. Astrazeneca’s day was emphatically not a win for the FTSE, just not another loss. We can admit LSE:AZN now look like \u00a313,181 is possible on the current price cycle.<\/p>\n
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While we’re far from comfortable we understand Treasury Bonds, the idea of spending money to back the UK Government being an anathema, we do understand the data behind what’s being happening since the Gilt (to use the hip term) surged upward to the 340 level before following the path of the Lemming, behaving in a fashion visually reminiscent of a dodgy AIM penny share.<\/p>\n
At least Gilts are free from Capital Gains tax, though the profitability of the T68 Bond seems to be questionable. The rate of 1\/8th% works out at a payment of around \u00a31.25 every six months for each bond owned, suggesting opening the letter which announces a payment would be about as exciting as reviewing a share dividend from Costain! However, it is perhaps possible bonds with the UK treasury would be safer than a commitment to our least exciting shareholding, bought as an unusual birthday present for my wife many, many, years ago. That particular initiative actually was a resounding success, her holding in Edinburgh Oil & Gas experiencing a crazy rise with a corporate takeover, one which she quickly translated into a Mazda MX5 sportscar with all the trimmings. But I think if I now opted to gift her some Treasury Bonds, she’d probably get creative with a pillow over my face one night while I sleep…<\/p>\n
There are signs T68 is shuffling its feet, perhaps readying itself to change direction.<\/p>\n
Above 45 pounds should now prove interesting, hopefully triggering movement to an initial 53 quid with our secondary, if exceeded, working out at a more useful 63 pounds and a desperate need for us to revisit the tea leaves and attempt to divine the future. As this particular bond expires in 2068, we guess positive movements shall not prove the most vivid, once it starts to move properly.<\/p>\n
Should things intend go pear shaped, below \u00a343 risks promoting reversal to an initial \u00a340 with our secondary, if broken, an eventual \u00a337 and “perhaps” a bottom. There will certainly be a need for “fingers crossed” becoming a valid part of any trading strategy, should this Gilt discover an excuse to wander below 40 pounds.<\/p>\n
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