Franklin Templeton Overweight Gilts

RTRS covers comments from Franklin Templeton's head of European fixed income David Zahn, as he highlights that he is overweight when it comes to gilt allocation. He believes that the BoE probably needs to cut rates sooner than its peers (see previous gilt bullet for some colour on the evolution of BoE market pricing in recent weeks).

• In terms of the details Zahn notes that “the UK economy is doing worse so we actually have an overweight to UK fixed income in our European accounts, which is unusual - we don't normally do that.”
• “The UK economy has continued to disappoint, inflation is coming down quickly and the economy is more responsive to rate hikes, and rate cuts, than Europe or the U.S…. recent rate hikes will soon start dragging on the economy even more.”
• "Therefore the central bank should be able to cut rates fairly soon, I wouldn't be shocked if they cut in the next 2-3 months.”