AJ Bell Money & Markets Deep Dive #5: Does Rachel Reeves have a bond market problem?
Sep 22, 2025
Ian Aylward, Head of Investment Partnerships at AJ Bell, dives into bond mechanics and what drives prices. Rupert Harrison, former adviser to Chancellor George Osborne, discusses high UK government borrowing costs and fiscal credibility. Alex Ralph, Fund Manager at Nedgroup Global Strategic Bond fund, shares her bond selection process and current market opportunities. The guests explore why bonds are attractive in today’s climate, the implications of government budgets, and what investors need to consider to navigate the bond landscape.
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How Bonds Work And Yield Dynamics
- A bond is a fixed‑coupon loan to an issuer and returns the notional at maturity if held to term.
- Bond prices fluctuate so yields and prices move in opposite directions as market rates change.
Bond Types And Risk‑Return Spectrum
- Bonds vary by issuer and credit risk from sovereigns to emerging markets and corporate high yield.
- Higher default risk pays higher coupons and investors price bonds relative to perceived risk.
Why Inflation‑Linked Bonds Matter
- Inflation‑linked bonds adjust coupons and principal with inflation to protect real purchasing power.
- They reduce inflation risk and align government incentives to control inflation.